The legal nature of export credit insurance and export credit guarantees

: a comparative study between the UK and China

Abstract

Export credit insurance (“ECI”) and export credit guarantees (“ECGs”) are important financial instruments to support international trade. However, the legal nature of ECI and ECGs remains confusing, since the terms “insurance” and “guarantee” are often used interchangeably by export credit agencies (“ECAs”) to label their products.
This research aims to demonstrate that the true legal nature of an export credit facility depends on its substantial terms, and that ECI is a contract of insurance and an ECG a contract of guarantee respectively. It will compare their legal characteristics from a contractual perspective and show that an ECG is a client-friendlier product and easier than ECI for banks to use: (a) the formation process of an ECG is more straightforward; (b) an ECI policy imposes more substantial obligations on banks than an ECG contract; (c) banks are subject to the duty of fair presentation only under ECI; (d) the claim handling process under ECI could be prolonged, whereas under an ECG, ECAs normally pay banks straight away.
Based on the observations above, this research seeks to further explore why some ECAs provide ECGs in addition to ECI, despite the fact that ECI is the mainstream product in the market. An ECG is generally more costly than ECI, which, among other practical reasons, makes it a less popular product. However, because of its legal characteristics, it still plays an essential role in supporting certain tailored supplier/buyer credit transactions. Protected by an ECG, banks will be mostly encouraged to finance exporters.
The focus of this work will be mainly on English law, whereas a thorough comparison with Chinese law will be included. Besides, although this thesis is primarily a doctrinal study, some empirical approaches such as the observation on the global export credit industry will form a significant part in this thesis. In particular, the outcome of the author’s previous internship research at the International Union of Credit and Investment Insurers (“the Berne Union”), will be discussed throughout this work.

Date of Award	1 Feb 2021
Original language	English
Awarding Institution	King's College London
Supervisor	Ozlem Gurses (Supervisor) & Eva Lomnicka (Supervisor)