India: Banking On Guarantees: Exploring The Quandary Over Invocation Of Non-Performance Bank Guarantees

Last Updated: 4 November 2019
Article by Arka Majumdar and Debanik Bid
Most Read Contributor in India, November 2019

Introduction

Since the inception of Insolvency and Bankruptcy Code, 2016 ('IBC'), one of the most vexatious issues which confronted the insolvency practitioners alike, pertained to the enforceability of third party guarantees during the moratorium period of a corporate debtor in relation to which a corporate insolvency resolution process ('CIRP') has been initiated. This prompted the legislature to amend1 sub-section (3) of Section 14 of the IBC, to specify that the moratorium during CIRP would not stand extended to preclude proceeding against a surety in a contract of guarantee to a corporate debtor2.

Whilst, the aforesaid amendment clarified the ambiguity surrounding enforceability of third party guarantee during moratorium, the issue surrounding the invocation of bank guarantees (not being in the nature of performance bank guarantees) ("Non-performance Bank Guarantees" or "NPBG") continues to pose issues for the insolvency practitioners, primarily due to the fact that, legislature decided to specifically exclude performance guarantees ("PBG") from the ambit of definition of 'security interest' as defined under Section 3 (31) of the IBC.

The purpose of this paper is to examine and evaluate whether an NPBG, deserves a different treatment from PBG, in so far as, its invocation during moratorium period is concerned.

Judicial Pronouncements So Far

The issue of permissibility of invocation of NPBGs during moratorium probably first arose before the High Court of Gujarat3, where a writ petition was moved by the resolution professional of a corporate debtor seeking injunction from invocation of bank guarantee issued on behalf of a corporate debtor undergoing CIRP. The Hon'ble High Court of Gujarat restrained the invocation of bank guarantee in question and observed as follows:

"normally the Court would decline to interfere with the invocation of the bank guarantee or the performance guarantee as it has been settled law that the Court should decline interference with the invocation of the bank guarantee except on limited grounds. However, the law declared, and observation made has reference to ordinary commercial transaction and performance guarantee. In the facts of the case, subsequent application of the Insolvency and Bankruptcy Code, 2016 will have to be considered, which provides for a separate procedure in case of such Company, which is under resolution process." (emphasis supplied)

If we turn our attention to the orders passed by various benches of the National Company Law Tribunal ("NCLT"), we note that in one of the first cases where the issue of invocation of NPBG was considered, the Kolkata Bench of NCLT, in the matter of Berger Paints India Ltd. v. Precisions Engineers & Febricators Pvt. Ltd.4 denied the invocation of NPBG noting the following:

"7....Being found that the issuance of bank guarantee is subsequent to the declaration of moratorium it appears to us that no direction to be issued to the RP for re-consideration of the direction which he already given to the petitioner." (emphasis supplied)

Interestingly, the order was premised on an erroneous assumption of the NPBG (which the order records to have been issued on March 15, 2017) was issued subsequent to the declaration of moratorium (which the order notes to be April 4, 2017), which was admittedly not the case. However, as the matter stood, the decision did not deliberate on whether such an NPBG was enforceable had it been issued prior to admission of CIRP, which coincides with the commencement of moratorium.

The issue again arose before NCLT, Ahmedabad Bench in the matter of Mr. Nitin Hasmukhlal Parikh v. Madhya Gujarat Vij Company Limited & Ors.5, where encashment of PBG during moratorium was approved. While allowing such invocation, NCLT referred to the definition of 'security interest' as defined under Section 3 (31) of the IBC, and observed as follows:

"Section 3 (31) clearly says that Performance Guarantees are not included in the Security Interest. What is covered by the order of this Authority under Section 14 (1) (c) is the Security Interest. Therefore, the moratorium order passed by this Tribunal is not applicable to the Performance Guarantees given by the Corporate Debtor...The moratorium order passed by this Tribunal applies in respect of Bank Guarantees other than Performance Guarantees furnished by the Corporate Debtor in respect of its property since it comes within the meaning of 'security interest'. Therefore, Respondent no. 1 is not entitled to invoke Bank Guarantee other than that comes within the meaning of performance guarantee, during moratorium period." (emphasis supplied)

Notably, as is apparent from the aforesaid extract, the NCLT distinguished a performance guarantee and other forms of bank guarantees, by holding that NPBGs fall within the meaning of 'security interest' and thus, deserving immunity during moratorium.

The next significant decision in this regard would be the decision of NCLT, Principal Bench in the matter of Levcon Valves v. Energo Engineering Projects Limited6, which incidentally was rendered post the amendment to the IBC excluding invocation of guarantees from the purview of moratorium. In this case, the NCLT allowed the invocation of bank guarantees by observing as follows:

"9. A close examination of the aforesaid provision would make it patent that moratorium would not apply to a surety in a contract of guarantee to a Corporate Debtor. It is therefore evident that Section 14(1) of the Code, 2016 would not come in the way of the non-applicant-respondent no. 1 to encash the bank guarantee. Moreover, it is an independent agreement....." (emphasis supplied)

It may be noted that, in the instant case also, it appears that the nature of guarantee proposed to be invoked was a PBG and not an NPBG one and thus, the decision does not seem to advance any case for treatment of NPBG similar to PBG.

The Principal Bench of NCLT, again in the case of Gudearth Homes Infracon v. Veebro Technoplast7, allowed invocation of a bank guarantee during moratorium without seeking leave of the adjudicating authority, basis the amendment to the IBC allowing proceeding against surety during moratorium. Unfortunately, the order did not clarify whether the bank guarantee qualified as NPBG or a PBG.

The same bench, however, took a completely different view in the matter of ICICI Bank Ltd. v. C & C Construction Ltd.8 where the invocation of bank guarantee was stayed keeping in view that moratorium period was under operation. Again, the order did not specify the nature of the bank guarantee which was stayed.

In so far as other benches are concerned, of significant interest would be the decision of NCLT, Mumbai Bench, rendered in the matter of Kohinoor Crane Services v. Petron Engineering Construction Limited, vide two orders dated April 26, 20189 and June 12, 201810, where it even injuncted invoking a PBG during moratorium stating that alienation of any asset or recovery from any property of the corporate debtor is prohibited during moratorium and was against the provisions of the IBC and prejudice to the rights of the stakeholders.

Notably, the aforesaid orders of NCLT was challenged before the National Company Law Appellate Tribunal ("NCLAT") and in the matter of GAIL (India) Ltd. v. Rajeev Manaadiar & Ors.11, NCLAT set aside the aforesaid orders allowing invocation of the performance bank guarantee holding that,

"6. From sub-section (31) of Section 3, it is clear that the 'security interest' do not include the 'Performance Bank Guarantee', therefore, we hold that the 'security interest' mentioned in clause (c) of Section 14(1) do not include the 'Performance Bank Guarantee'. Thereby the 'Performance Bank Guarantee' given by the 'Corporate Debtor' in favour of the Appellant- 'GAIL (India) Ltd.' is not covered by Section 14. The Appellant- 'GAIL (India) Ltd.' is entitled to invoke its 'Performance Bank Guarantee' in full or in part". (emphasis supplied)

Thus, as the law stands today, it appears that the predominant view amongst the different benches of the NCLT and NCLAT suggests no restriction on PBGs during moratorium. The same clarity, however, is missing in so far as NPBG is concerned, with NCLT Ahmedabad, in Mr. Nitin Hasmukhlal Parikh v. Madhya Gujarat Vij Company Limited & Ors.12, supporting a differential treatment for NPBG.

With this background, let us now examine whether there is a justifiable reason to distinguish between a PBG and NPBG, in so far as their enforcement during moratorium is concerned, which can withstand legal scrutiny.

Distinction between 'PBG and 'NPBG' for Enforcement during Moratorium

The rationale behind distinguishing PBG and NPBG primarily comes from the treatment of performance guarantee in the definition of security interest which is extracted herein below for ease of reference:

"Section 3 (31) "security interest" means right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or performance of any obligation of any person:

Provided that security interest shall not include a performance guarantee."13 (emphasis supplied)

As is apparent, the legislature has specifically excluded a PBG, prompting the authorities to distinguish a PBG from an NPBG. In the following paragraphs it would be our endeavour to establish that such distinction is not warranted under the provisions of the IBC.

Expressio Unius Est Exclusio Alterius

As we have noted in the preceding paragraphs, the legislature had consciously excluded PBG from the scope of 'security interest'. Basis the same, a separate treatment for NPBG may very well be supported, if one recollects the well-known doctrine of expression 'unius est exclusio alterius-the express prevention of the one thing implies the exclusion of another' and 'expressum facit cessare tacitum-what is expressed makes what is silent to cease'.

However, one should also remember that whilst such maxim is a useful servant, it can turn out to be a dangerous master, if it is resorted to indiscriminately.14 The following observation of the Supreme Court, in Mary Angel v. State of Tamil Nadu15, is particularly apposite for understanding the aforesaid proposition:

"19. Further, for the rule of interpretation on the basis of the maxim "expressio unius est exclusio alterius", it has been considered in the decision rendered by the Queen's Bench in the case of Dean v. Wiesengrund [(1955) 2 QB 120 : (1955) 2 All ER 432]. The Court considered the said maxim and held that after all it is no more than an aid to construction and has little, if any, weight where it is possible to account for the "inclusio unius" on grounds other than intention to effect the "exclusio alterius". Thereafter, the Court referred to the following passage from the case of Colquhoun v. Brooks [(1887) 19 QBD 400 : 57 LT 448] QBD at 406 wherein the Court called for its approval ... The maxim "expressio unius est exclusio alterius" has been pressed upon us. I agree with what is said in the court below by Wills, J. about this maxim. It is often a valuable servant, but a dangerous master to follow in the construction of statutes or documents. The exclusio is often the result of inadvertence or accident, and the maxim ought not to be applied, when its application, having regard to the subject-matter to which it is to be applied, leads to inconsistency or injustice. In my opinion, the application of the maxim here would lead to inconsistency and injustice and would make Section 14(1) of the Act of 1920 uncertain and capricious in its operation." (emphasis supplied)

Erstwhile Provision under SICA

Before we seek guidance from the provisions of IBC as to whether the legislature would have intended to exclude NPBG from the purview of security interest, in so far as enforcement during moratorium is concerned, let us first analyse the provisions of Section 22 of Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA"), which may be considered as the precursor to Section 14 of IBC, to explore if the two types of guarantees can be provided differential treatment in for as their invocation during moratorium period is concerned.

If one reads Section 22 (1) of SICA16, one may note that in terms of the provision, where a proceeding is pending before the appropriate authority under SICA, the following were prohibited:

  1. proceedings for the winding up of the industrial company, or
  2. proceedings for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof, and
  3. suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company.

As is apparent, Section 22 (1) of SICA specifically prohibited enforcement of any guarantee in respect of any loans or advances granted. This provision has been interpreted by courts to distinguish the guarantees in respect of loans or advances from other guarantors, such as performance bank guarantee which are apparently not in respect of loans or advance granted to the industrial company. Reference may be drawn from the following judgements:

  1. Delhi High Court in the matter of Rashtriya Chemicals & Fertilizers Limited v. State Bank of Patiala17, held as follows:

    "The guarantee in respect of outstanding sums in respect of aforesaid commercial transactions cannot, therefore, be said to be a guarantee in respect of any loan or advance extended by the plaintiff to M/s Montari Industry Limited. In my considered view, therefore, the present suit cannot be labelled as a suit for enforcement of a guarantee in respect of a loan or advance to the industrial company, but is a suit based on an independent contract between the plaintiff and defendant to which the industrial company viz. Montari Industries is not a party. The necessary corollary is that the sanction of the Board or the Appellate Authority under Section 22(1) of the SICA cannot be said to be a sine qua non for the institution of the suit."
  2. Madhya Pradesh High Court in the matter of Allahabad Bank, Katni, Jabalpur v. M.P. Electricity Board, Rampur18 held that an irrevocable (bank) guarantee, furnished to secure performance of a contract by a company which is later declared as a sick company, can be encashed as its encashment is not barred by SICA.

Position under IBC

In the preceding paragraphs, we have noted how the erstwhile regime had distinguished between guarantees which were in respect of loans or advances from the bank guarantees in so far as enforcement during pendency of a reference under SICA was concerned. Whilst, one may be tempted to import such an understanding even in the IBC regime and would seek to draw support from the specific exclusion of PBG from the definition of 'security interest', in our view such a distinction is not warranted under the IBC.

To substantiate our argument, let us first analyse the implication of a guarantee being invoked and the right of such person who has provided the guarantee. In this regard one may gainfully refer to the following observation of the Insolvency Law Committee, appointed by the Ministry of Corporate Affairs in its report dated March 26, 201819:

"5.10. The Committee further noted that a literal interpretation of Section 14 is prudent, and a broader interpretation may not be necessary in the above context. The assets of the surety are separate from those of the corporate debtor, and proceedings against the corporate debtor may not be seriously impacted by the actions against assets of third parties like sureties. Additionally, enforcement of guarantee may not have a significant impact on the debt of the corporate debtor as the right of the creditor against the principal debtor is merely shifted to the surety, to the extent of payment by the surety. Thus, contractual principles of guarantee require being respected even during a moratorium and an alternate interpretation may not have been the intention of the Code, as is clear from a plain reading of Section 14...The Committee concluded that Section 14 does not intend to bar actions against assets of guarantors to the debts of the corporate debtor and recommended that an explanation to clarify this may be inserted in Section 14 of the Code. The scope of the moratorium may be restricted to the assets of the corporate debtor only." (emphasis supplied)

Considering that right of the creditor against the principal debtor is shifted to the surety to the extent of payment by the surety, in the event the bank guarantee is invoked, the lender would be subrogated in the place of the original claimant and can maintain a claim to the extent of such payment made. Whilst, it is true that the possibility of recovering the entire amount may be remote, that does not justify a differential classification between banks providing NPBG and a third-party providing guarantee to the corporate debtor, especially when the IBC excludes guarantee from the purview of moratorium.

We can further substantiate our argument by analysing Section 14(1) of the IBC which deals with the moratorium.

Section 14: Moratorium

(1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:-

(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;

(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;

(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);

(d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.

(emphasis supplied)

As is apparent, in terms of Section 14 (1) (c) what is prohibited is any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property. The language of Section 14 (1) (c) when contrasted with the definition of 'security interest' under Section 3 (31) of IBC, one may note that whilst the definition of security interest includes any right, title or interest or a claim to property, created in favour of, or provided for a secured creditor (and thus admits a construct where third party security is also considered as security interest), Section 14 (1) (c) is limited to the security interest created by the corporate debtor.

In this regard, one may note that bank guarantees are contractual undertakings, normally granted by banks, to pay, or to repay, a specified sum in the event of any default in performance by the principal-debtor of some other contract with a third party, the creditor.20 Therefore, it is perceptible that, whilst a bank guarantee would be security interest created on behalf of the corporate debtor, it cannot be said to be a security interest created by the corporate debtor under Section 14 (1) (c).

Let us for the time being ignore the subtle distinction between security interest created by and on behalf of the corporate debtor and try to examine, if our proposition can derive support from other provision of IBC.

To support our argument further, let us revisit Section 14(1)(c) of IBC again and note that, what is prohibited is any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property.

If one analyses if a bank guarantee can be treated to be a property of the corporate debtor, gainful reference may be made to the decision of High Court of Andhra Pradesh in the matter of Haryana Telecom Ltd. and Ors. v. Aluminium Industries Ltd. and Ors.21, where it was held that bank guarantee cannot be said to be the property of the debtor simply because it is indirectly going to be affected by enforcement of the said bank guarantee. The relevant observations in this regard as follows:

"Similarly, proceedings to encash the bank guarantee cannot be said to be covered by the phrase "execution, distress or the like", contemplated under section 22(1) of the Act. A similar question came up for consideration before the learned single judge in Aluminium Industries Ltd. v. Hindustan Cables Ltd. (W.P. No. 9420 of 1992 dated 11-9-1992), which was rejected by the learned single judge by observing as follows:

"I will now dispose of the legal contention raised by the learned counsel for the petitioner that by virtue of section 22 of the Sick Industrial companies (Special Provisions) Act, 1985, the invocation of bank guarantees is barred. Learned counsel submits that the encashment of bank guarantees amounts to proceedings against the properties of the petitioner company and, therefore, it is prohibited by section 22. Learned counsel reinforces his argument by stating that the word 'property' bears a wide connotation in legal parlance and the word 'property' occurring in section 22 would encompass within its sweep the bank guarantees as well. It is difficult to accept this contention of learned counsel. In fact, the argument advanced on behalf of the petitioner-company that section 22 applies to a case of encashment of bank guarantees was negatived by the Division Bench in the writ appeal afore-mentioned. The Division Bench observed:

"Learned counsel placed reliance on section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. The same, however, has no application to the instant case. Invoking the bank guarantee by the second respondent does not come within the meaning of the words 'execution, distress or the like against any of the properties of the industrial company' in sub-section (1) of section 22 of the Act."

I also share the same view. In elaborating further, I would add that the invocation of the bank guarantee by the beneficiary under the guarantee does not put in motion any proceedings for execution, distress or the like against the properties of the company. It is difficult to accept the contention of learned counsel that the bank guarantees constitute property of the petitioner. The mere fact that the petitioner had deposited some money with the bank as a prelude to obtaining the bank guarantees or that the petitioner is exposed to a future pecuniary liability as a consequences of encashment of bank guarantee, does not mean that the petitioner has some sort of proprietary right or interest in the bank guarantees as such and that a proceeding analogous to execution or distress is being taken against the properties of the company. It may be that as a result of the encashment of bank guarantee by the first respondent, the bank may proceed to recover the amount from the petitioner. But that is only an indirect though inevitable consequences of invoking the bank guarantee. In fact that stage has not yet reached....". (emphasis supplied)

Therefore, taking into consideration the aforesaid extract, it can very well be argued that the bank guarantee cannot be termed as a property of the corporate debtor, and thus placing it outside the sweep of the prohibition under Section 14(1) of the IBC.

Concluding Remarks

It would be interesting to follow the development of jurisprudence in this regard and to examine, if the NCLTs choose to look beyond the nature of bank guarantees to ascertain whether invocation of such bank guarantees would be permitted during moratorium. But as the law stands today, any artificial distinction between PBG and NPBG, in so far as enforcement during moratorium is concerned, hardly merits.

Footnotes

[1] The Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, dated August 17, 2018. The amendment was made effective from June 6, 2018.

[2] Section 14(3)(b) of IBC.

[3] ABG Shipyard Limited v. Government of India & Ors, Gujarat High Court [Special Civil Application No. 17666 of 2017]; Order dated September 25, 2017. The writ petition was subsequently withdrawn.

[4] Berger Paints India Ltd. v. Precisions Engineers & Febricators Pvt. Ltd., NCLT, Kolkata Bench [C.P. No. 173/KB/2017, I.A. No. 406/KB/2017]; Order dated November 30, 2017.

[5] Mr. Nitin Hasmukhlal Parikh v. Madhya Gujarat Vij Company Limited & Ors., NCLT, Ahmedabad Bench [I.A. No. 340/2017 in C.P. (IB) No. 28/10/NCLT/AHM/2017]; Order dated February 9, 2018.

[6] Levcon Valves v. Energo Engineering Projects Limited., NCLT, Principal Bench (CA No. 453(PB)/ 2017 in CP No. IB-160(ND)/2017); Order dated August 24, 2018

[7] Gudearth Homes Infracon v. Veebro Technoplast NCLT, Principal Bench (IB-159 (PB)/2017); Order dated September 6, 2018

[8] ICICI Bank Ltd. v. C & C Construction Ltd., NCLT, Principal Bench (IB-1367 (PB)/2018); Order dated April 08, 2018.

[9] Kohinoor Crane Services v. Petron Engineering Construction Limited, NCLT, Mumbai Bench [MA No. 384/(MB)/2018 in CP No.1374/I&BC/MNCLT/MB/MAH/2017]; Order dated April 26, 2018.

[10] Kohinoor Crane Services v. Petron Engineering Construction Limited, NCLT, Mumbai Bench [MA No. 521/2018 in CP No.1374/I&BC/MNCLT/MB/MAH/2017]; Order dated June 12, 2018.

[11] GAIL (India) Ltd. v. Rajeev Manaadiar & Ors. [Company Appeal (AT)(Insolvency) No. 319 of 2018]; Order dated June 26, 2018.

[12] Mr. Nitin Hasmukhlal Parikh v. Madhya Gujarat Vij Company Limited & Ors., NCLT, Ahmedabad Bench [I.A. No. 340/2017 in C.P. (IB) No. 28/10/NCLT/AHM/2017]; Order dated February 9, 2018.

[13] Part I, Section 3 (31) of The Insolvency and Bankruptcy Code, 2016 (No. 31 of 2016)

[14] Ramdev Food Products Private Limited v. State of Gujarat, Supreme Court [AIR 2015 SC 1742]

[15] Mary Angel v. State of Tamil Nadu, Supreme Court [(1999) 5 SCC 209]

[16] Section 22 of SICA: Suspension of legal proceedings, contracts, etc.—

(1) Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority.

...

[17] Rashtriya Chemicals & Fertilizers Limited v. State Bank of Patiala, Delhi High Court, [2008]81SCL461(Delhi).

[18] Allahabad Bank, Katni, Jabalpur vs M.P. Electricity Board, Rampur, Madhya Pradesh High Court [AIR 1996 MP 1].

[19] Report of the Insolvency Law Committee, March 2018

[20] Chitty on Contracts, 28th Edition, Vol II, p 1303, paras 44-014.

[21] Haryana Telecom Ltd. and Ors. v. Aluminium Industries Ltd. and Ors. [1997]88 CompCase 735(AP)

Originally published 30th May, 2019

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions