The recent decision of the Banking and Financial Arbitrator (“ABF”) No. 9238 of 14 June 2022 addresses the issue concerning the possibility for a guarantor to withdraw from an omnibus-type guarantee provided in favour of a bank. The omnibus guarantee is a guarantee contract that is widespread in banking practice and which originates from Article 1938 of the Italian Civil Code, by means of which the guarantor undertakes to guarantee the performance of all obligations, present and future, that the principal debtor has undertaken or will undertake towards the bank.
In the present case, the applicants seised the ABF to ascertain that the amount they were requested to pay by the defendant bank pursuant to an omnibus guarantee provided by them for a debt of a limited liability company of which their father was a shareholder was not due.
The intermediary objected that the amount the applicants were requested to pay was correct, since it was calculated (notwithstanding the repayment of the principal amount) on the interest, fees and commissions that remained outstanding at the effective date of the withdrawal.
The omnibus guarantee signed by the applicants in the interest of the S.r.l. provided for their joint and several liability for the performance of the company's obligations towards the bank arising from banking transactions of any nature up to the maximum amount guaranteed. The subject matter of the guarantee included the principal amount owed by the principal debtor and any other obligation owed by way of interest, including interest on arrears, and any other accessory and/or expense.
Subsequently, the guarantors communicated their withdrawal from the bank guarantee since the company had been sold to third parties outside their family. The bank reported that at the time the withdrawal took effect, i.e. 10 days after receipt of the applicants' notice, the principal amount owed by the company to the bank was zero.
The subject matter of the dispute consists of the bank's request to the applicants to pay the interest accrued after the revocation of the guarantee by submitting account statements from which it was not possible to discern the debt in respect of which interest had accrued at the time of the revocation.
The applicants complained that this claim was unlawful because it followed their withdrawal from the guarantee provided by them and was the result of a substantial wrongful grant of credit to the limited liability company, since the principal debt had been satisfied in full at the time of their withdrawal.
The intermediary objected that, under the terms of the guarantee provided, the applicants were in any event obliged not only for the debtor's obligations existing at the time of the effectiveness of the termination, but also for any other obligations that might arise or accrue thereafter in connection with the agreements existing at the time of the termination.
The ABF, following its recent decisions, has held that the withdrawal from the bank guarantee does not have the effect of extinguishing the guarantee, but only of limiting its amount to the debt existing on the effective date of the withdrawal (see Board of Rome, decision no. 428 of 10.01.2019; Board of Milan, decision no. 2773 of 29.01.2019; Board of Rome, decision no. 7290 of 05.04.2018).
Therefore, the guarantee must be considered to be limited to the amount of the debt existing at the date of termination, both as to principal and interest and other accessory charges. In the present case, the principal debt having been satisfied in full, the bank should have proved the amount of the interest due and how it had been computed.
The intermediary, however, did not provide sufficient proof of the consistency of the debt beyond the principal exposure, and the ABF held that since the bank had not discharged its burden of proof, nothing was owed by the applicants.
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.