ICC URDG 758 — Demand Guarantees
URDG 758 is the International Chamber of Commerce's Uniform Rules for Demand Guarantees, ICC Publication No. 758, in force since 1 July 2010. It is the global rulebook for independent demand guarantees and counter-guarantees in international commodity trade.
URDG 758 is endorsed by the World Bank, FIDIC, UNCITRAL, the African Development Bank and the European Bank for Reconstruction and Development. It is the dominant rulebook for advance-payment, performance and bid-bond instruments outside the United States, and is the standard incorporated in Russian, Kazakh and Uzbek commodity-export SPAs that ship to East Africa.
URDG does not apply automatically. It is incorporated by the wording: "This guarantee is subject to the Uniform Rules for Demand Guarantees, ICC Publication No. 758."
The Operative Articles
| Article | Subject | Operational impact |
|---|---|---|
| Article 5 | Independence | The guarantee is separate from the underlying SPA. The guarantor cannot raise SPA-dispute defences. The beneficiary's compliant call cannot be blocked by contract dispute (subject to the narrow common-law fraud exception). |
| Article 7 | Non-documentary conditions | Conditions not specifying a document of compliance must be disregarded. Eliminates "to the satisfaction of the beneficiary" clauses. |
| Article 15 | Mandatory supporting statement | The beneficiary's demand must include a written statement identifying the breach. URDG 758's fairness pivot — URDG 458 had no such requirement. |
| Article 20 | Examination period | The guarantor has 5 business days following presentation to examine and pay or refuse. Silence is non-compliance. |
| Article 21 | Currency of payment | Sets the rule on the currency in which payment is made and on the conversion mechanism if the guarantor is unable to pay in the specified currency. A payment-currency rule, not a free-standing FX risk allocation. |
| Article 22 | Counter-guarantee | Defines the cross-border two-instrument structure: an applicant's bank issues a counter-guarantee to a guarantor bank in the beneficiary's jurisdiction, which in turn issues the local guarantee on its own credit. |
| Article 23 | Extend or pay | Where the beneficiary makes a complying demand for payment but indicates willingness to accept extension, the guarantor may suspend payment for up to 30 calendar days while seeking the applicant's extension instructions. If extension is not arranged, the original demand for payment must be honoured. |
| Article 26 | Force majeure | Suspension of the guarantor's obligations during force majeure, with a 30-calendar-day post-FM payment window. |
| Article 33 | Transfer of guarantee | Transfer is permitted only where (a) the guarantee expressly states it is "transferable" and (b) the guarantor consents at the time of transfer. Both requirements must be met. |
(Article 2 contains the rulebook's definitions and is not itself an operative article in the sense that Articles 5, 7, 15, 20, 22, 23, 26 and 33 are.)
The Counter-Guarantee Structure (Articles 2 and 22)
URDG 758 has no confirmation mechanism. The functional equivalent for a beneficiary requiring local-bank recourse is the counter-guarantee. The structure has two instruments and two issuing banks:
- The applicant's bank (instructing party) issues a counter-guarantee in favour of a guarantor bank in the beneficiary's jurisdiction, drawing under URDG 758 Article 22.
- The guarantor bank issues a local guarantee to the beneficiary, on its own credit, under URDG 758 (or local-law equivalent if the beneficiary requires it).
The beneficiary calls the local guarantee against the local bank. The local bank then calls the counter-guarantee against the applicant's bank. The structure is the URDG-correct way to give a Kenyan beneficiary local-bank recourse on a guarantee originally instructed by a foreign applicant — a NCPB or KTDA bidder backed by a Russian producer's APG, for example, or a Kenyan blender taking advance-payment security on a Far East producer prepayment.
Use Cases
Bid Bond — NCPB, KNTC, KTDA, county-government tenders
A Kenyan bidder for an NCPB strategic-reserve tender, a KNTC subsidy-supply contract, a KTDA NPK 26:5:5 lot or a county-government bulk procurement is required to post a bid bond, typically 2–5% of tender value, protecting the tendering authority against bidder withdrawal, refusal to sign, or failure to post the subsequent performance bond.
- Issued by the bidder's bank under URDG 758 Articles 5 and 15
- Validity: tender period plus 30–90 days
- Premium pricing in 2025–26: 0.5–1.5% per quarter on tier-1 Kenyan corporates
- Cash cover: 25–100% depending on the bidder's bank-rating
- The bidder's bank issues; Sarpah is not on the instrument chain. Sarpah introduces the bidder to producers whose banks will issue the corresponding APG once the bid is awarded.
Advance Payment Guarantee — MT103 prepayment to Russian / CIS producer
The structural instrument most common on Russia / CIS commodity trade. Producers commonly require MT103 prepayment to a producer or producer-affiliated trading account. No professional buyer prepays without security. The producer's bank therefore issues an APG in the buyer's favour for the prepaid amount.
- Issued under URDG 758 Articles 5, 15, 20 and 23
- Callable on first demand with the Article 15 supporting statement that the cargo failed to load by ETD or failed COA at load port
- Tenor: contract duration plus 60 days
- Cross-border structure: typically counter-guarantee under Article 22 where the buyer's bank requires Kenyan-bank recourse
- Bank fees on the seller's side: 0.75–1.5% per quarter of guaranteed amount
Performance Bond — annual or multi-shipment SPAs
Where the cargo sits inside a multi-shipment frame contract — for example, a 12-month NPK supply agreement with a parastatal — the buyer receives a performance bond from the supplier's bank.
- Typically 5–10% of contract value
- Validity: contract term plus 30 days
- Article 23 extend-or-pay active in nearly all parastatal contracts
- Issued under URDG 758 Articles 5 and 15
Retention / Warranty Guarantee
Less common in fungible commodity trade. Used in fertilizer-blending plant supply contracts where product performance can only be assessed post-application.
URDG 758 vs URDG 458 — The 2010 Pivot
URDG 458 (1992) was the first ICC attempt and was widely criticised. URDG 758 (2010) corrected eight specific failures:
| Issue | URDG 458 | URDG 758 |
|---|---|---|
| Supporting statement for demand | Not required | Mandatory (Art. 15) |
| Examination period | "Reasonable time" | 5 business days (Art. 20) |
| Force majeure | Silent | Article 26 — explicit |
| Extend or pay | Implicit only | Article 23 — explicit |
| Non-documentary conditions | Permitted | Disregarded (Art. 7) |
| Expiry on non-business day | Unclear | Extended to next business day (Art. 14(g)) |
| Transfer of guarantee | Loosely allowed | Stricter; both transferable wording and guarantor consent (Art. 33) |
| Currency of payment | Unclear | Article 21 — explicit |
A guarantee under URDG 458 or under unspecified "URDG-style" wording does not bind the issuing bank to the five-business-day discipline. The buyer's bank will normally require URDG 758 incorporation in the SPA wording.
SWIFT Vehicle
URDG 758 demand guarantees are issued via MT760 (Demand Guarantee / Standby LC). Field 22A specifies purpose; field 40C specifies applicable rules — for URDG 758 instruments, field 40C is tagged URDG/758. Counter-guarantees under Article 22 are also issued on MT760, with the local guarantee subsequently issued by the in-country guarantor bank. Amendments travel on MT767, acknowledgements on MT768.
Authoritative Sources
- URDG 758 — ICC Publication 758E. ISBN 978-92-842-0036-5
- Affaki & Goode, Guide to ICC Uniform Rules for Demand Guarantees URDG 758 — ICC Publication 702E
- ICC Banking Commission Opinions on URDG — https://iccwbo.org/business-solutions/banking-finance/icc-opinions/
- ICC DOCDEX expert determinations — https://iccwbo.org/dispute-resolution/dispute-resolution-services/docdex/
- International Standard Demand Guarantee Practice (ISDGP) for URDG 758 — ICC Publication 814E (2021)
How Sarpah Supports
Sarpah is not on any guarantee. The buyer's bank issues, the seller's bank issues, or — under Article 22 — both. What Sarpah does is introduce buyers to producers whose banks routinely issue URDG 758 APGs, support the SPA wording so that the rule reference is correctly incorporated, and stay close to the document choreography from issuance through release.