The Contra Bank Guarantee is a crucial document in Indonesian commercial practice, particularly used in situations where a bank has issued or will issue a guarantee on behalf of a client (principal). This document becomes necessary whenever a bank guarantee is required for business transactions such as bid bonds, performance bonds, or advance payment guarantees. The Contra Bank Guarantee provides the bank with security and a legal right of recourse against the principal, ensuring that the bank can recover any amounts it may have to pay out under the original guarantee. The document must comply with Indonesian banking regulations, including Bank Indonesia and OJK requirements, and typically includes detailed provisions about the security arrangement, payment terms, and indemnity obligations. It's particularly important in sectors involving significant financial commitments or government contracts where bank guarantees are mandatory requirements.
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1. Parties: Identification of all parties involved: Principal (Applicant), Issuing Bank, and details of the original guarantee beneficiary
2. Background: Context of the transaction, reference to the original bank guarantee, and the underlying commercial relationship
3. Definitions: Definitions of key terms used throughout the agreement, including technical banking and guarantee-related terminology
4. Counter-Indemnity Obligation: Core provisions detailing the principal's obligation to indemnify the bank for any payments made under the original guarantee
5. Guarantee Terms: Reference to and description of the original bank guarantee terms, including amount, validity period, and purpose
6. Payment Provisions: Terms for reimbursement, including timing, method, and currency of payments
7. Security Arrangements: Details of any collateral or security provided to support the contra guarantee
8. Bank's Rights and Remedies: Specific powers and rights of the bank in case of default or claim under the original guarantee
9. Representations and Warranties: Standard declarations by the principal regarding their capacity and authority
10. Fees and Costs: Structure of fees, charges, and cost allocation
11. Term and Termination: Duration of the contra guarantee and conditions for termination
12. Governing Law and Jurisdiction: Confirmation of Indonesian law application and jurisdiction for disputes
1. Foreign Currency Provisions: Required when the guarantee involves multiple currencies or foreign exchange considerations
2. Regulatory Compliance: Specific section needed when dealing with regulated industries or cross-border transactions
3. Anti-Money Laundering Provisions: Required for high-value guarantees or when dealing with international transactions
4. Step-In Rights: Optional provisions allowing the bank to take over certain rights of the principal in specific circumstances
5. Multiple Bank Arrangements: Required when multiple banks are involved in the guarantee structure
6. Force Majeure: Optional provisions for extraordinary circumstances affecting the guarantee obligations
7. Assignment and Transfer: Required when transfer rights need to be specifically addressed
1. Schedule 1 - Original Bank Guarantee: Copy or details of the original bank guarantee being counter-guaranteed
2. Schedule 2 - Fee Schedule: Detailed breakdown of all applicable fees, charges, and commission rates
3. Schedule 3 - Security Documents: List and copies of all security documents provided as collateral
4. Schedule 4 - Payment Mechanics: Detailed procedures for payment processing and reimbursement
5. Schedule 5 - Required Documents: List of all documents required for guarantee administration
6. Appendix A - Specimen Signatures: Authorized signatures for all relevant parties
7. Appendix B - Notice Details: Contact information and notice requirements for all parties
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