Version date: 31 March 2015 - onwards
OTC Question 22: Conditions [last update 31 March 2015]
Article 2.1 of RTS on Third Country contracts
Article 2.1 of RTS on Third Country contracts - Conditions - cumulatively or singly?
In the following three cases in which a single guarantor gives several guarantees, should these guarantees be considered cumulatively or singly for the purpose of assessing whether the conditions in Article 2(1) of the RTS on Third Country contracts are met?
(case a) Guarantee A over Guaranteed Entity A’s liabilities to Beneficiary A and Guarantee B over Guaranteed Entity B’s liabilities to Beneficiary B, where the two guarantees are unrelated, except that they have the same guarantor.
(case b) Guarantee A over Guaranteed Entity A’s liabilities to Beneficiary A and Guarantee B over Guaranteed Entity A’s liabilities to Beneficiary B.
(case c) Guarantee A over Guaranteed Entity A’s liabilities to Beneficiary A and Guarantee B over Guaranteed Entity A’s liabilities to Beneficiary A.
OTC Answer 22
(case a) Without prejudice to Article 3 of the RTS on Third Country contracts, the conditions should be read separately for each guarantee. The two third country entities are different for each of the guarantees described.
(case b) Both guarantees should be looked at in conjunction because they both could involve exposure on the EU guarantor in relation to a single guaranteed entity as otherwise the multiplication of guarantees could allow circumvention of the provision.
(case c) The conditions should be read by taking the two guarantees together.