Lawsuit to Stop the Cashing of a Letter of Guarantee in the UAE, A Letter of Guarantee (LG) is an undertaking issued by a bank in favor of a client, who is called the Beneficiary or Employer.

It obligates the bank to pay a specific amount deposited on the Beneficiary’s behalf by another party called the Contractor.

Some companies require contracting companies to submit a Letter of Guarantee that includes depositing a sum of money in the bank in their favor. This ensures that the companies can seek compensation for any damage or loss incurred due to the Contractor’s breach of their pre-agreed contractual obligations.

The definition of Cashing a Letter of Guarantee in the UAE is the request submitted by the Beneficiary or Employer to the bank to liquidate the Letter of Guarantee.

This request is filed when the Contractor fails to execute their pre-agreed contractual obligations or breaches any of these obligations, which grants the Beneficiary the possibility of recovering any compensation or expenses from the guarantee amount held by the bank.

By contacting a specialized law office, such as Samaha Law Firm for Legal Consultations, you can complete the procedures for Cashing a Letter of Guarantee in the UAE in the correct legal manner, according to the contract previously concluded between the parties.

What are the Conditions for Cashing a Letter of Guarantee in the UAE?

The conditions for cashing a Letter of Guarantee in the UAE can be summarized as follows:

1. To proceed with cashing a Letter of Guarantee in the UAE, there must first be a Letter of Guarantee from the Contractor in favor of the Employer, deposited at the bank, which includes depositing the amount in their favor.
2. To proceed with cashing a Letter of Guarantee in the UAE, the Letter of Guarantee must be final (unconditional) and not preliminary.
3. To proceed with cashing a Letter of Guarantee in the UAE, the Contractor must have breached their contractual obligations toward the Employer according to the contract concluded between them.
4. To proceed with cashing a Letter of Guarantee in the UAE, the request to cash the Letter of Guarantee must not be submitted until after the expiration of the agreed-upon period in the contract between the contracting parties.

However, it may happen that the Contractor fulfills their contractual obligations, yet the Employer proceeds to request the bank to cash the Letter of Guarantee in the UAE. In this case, the Contractor opposes the action, leading to a dispute that may reach the judiciary. This is called a Lawsuit to Stop the Cashing of a Letter of Guarantee in the UAE. You can ascertain these conditions with sound legal justification by consulting a specialized office like Samaha Law Firm for Legal Consultations.

What are the Steps to Cash a Letter of Guarantee at the Bank in the UAE?

1. Prepare a Formal Request: The Beneficiary submits a request to the bank that issued the Letter of Guarantee.
2. Prepare Documentation: The Beneficiary attaches all necessary papers and documents with their request that prove the Contractor’s prior breach of their contractual obligations.
3. Bank Verification: The bank verifies the authenticity of the request to cash the Letter of Guarantee in the UAE and the submitted documents, and checks their conformity with the terms of the Letter of Guarantee.
4. Disbursement to the Beneficiary: Upon the bank’s confirmation that all required conditions are met, it proceeds to cash the Letter of Guarantee in the UAE to the Beneficiary.

You can complete all these procedures in the appropriate legal manner through a specialized lawyer’s office like Samaha Law Firm for Legal Consultations.

Samaha Law Firm for Legal Consultations provides the best drafting for a Lawsuit to Stop the Cashing of a Letter of Guarantee in the UAE, as follows:

To the Commercial Court in [……]

Plaintiff: [……] Contracting Company, represented by the General Manager [……], whose legal counsel is the Lawyer [……]. Defendant: [……] Company, represented by the General Manager [……]. Subject of the Lawsuit: Stopping the Cashing of a Letter of Guarantee in the UAE.

Facts: A contracting agreement was concluded between the client company and the defendant company for the execution of contractual works involving the construction of facilities in the port. A Letter of Guarantee was registered at [……] Bank, including a deposit of [……….] UAE Dirhams in favor of the defendant party to ensure the fulfillment of contractual obligations as agreed. The contractual works were executed and duly received by the defendant party. However, we were surprised that the defendant party proceeded to request the cashing of the Letter of Guarantee in the UAE and asked the bank to disburse the guarantee amount.

Since the client company has performed its contractual obligations in full, the defendant party does not have the right to receive the guarantee amount. Therefore, we approach the esteemed Court and request the following:

1. To halt the cashing of the Letter of Guarantee in the UAE until the lawsuit is decided.
2. To hold the defendant party responsible for all court costs, expenses, and attorney fees.

With Appreciation and Respect

Dubai, on ../../…. Authorized Lawyer [……] Signature […….]

What are the Mechanisms for Canceling a Letter of Guarantee?

A client can cancel a Letter of Guarantee by accessing the main website of the Ministry of Commerce and Industry with their digital identity, then specifying the request type as “Cancellation of Bank Guarantee.” They must attach the required documents on the electronic site, the most important of which is a Statement of Clearance (Bara’at Al-Dhimma) indicating that the client has fulfilled their obligations toward the Beneficiary. After obtaining confirmation of approval for the bank guarantee cancellation, the company’s account is closed upon the recovery of that guarantee. Samaha Law Firm for Legal Consultations assists you in executing these procedures in the correct legal manner to ensure the desired outcomes.

What is the Meaning of Cashing a Letter of Guarantee in the UAE?

The meaning of Cashing a Letter of Guarantee in the UAE is the request submitted by the Beneficiary to obtain the guarantee amount that was previously deposited, due to the client’s failure to fulfill their required obligations in the contract concluded between them and the Beneficiary, according to the prior agreement.

We advise anyone who wishes to file a Lawsuit for Cashing a Letter of Guarantee in the UAE to seek the assistance of the best specialized lawyers at Samaha Law Firm for Legal Consultations. Contact Us.