Himalayan Bank Ltd (HBL) and Bank of Kathmandu (BoK) might get their guarantee amount against the Chinese company back soon as a Chinese high court has today decided to review the earlier district court decision.
Henan Province’s People’s High Court ordered the review of the February 15 decision of district-level Zhengzhou Intermediate Court – in favour of China Construction Bank (CCB) – for which HBL and BoK had given counter guarantee in the Melamchi Drinking Water Project.
Himalayan Bank said that the decision of the Chinese high court to review the case is a positive step, and it is optimistic about receiving the counter guarantee amount soon.
Earlier on February 15, the Zhengzhou Intermediate Court had decided in favour of the Chinese contractor in the lawsuit filed against China Railway 15 Bureau, citing violation of underlying contract between China Railway and Melamchi Drinking Water Project.
HBL had issued $6.665 million as performance guarantee, while BoK had issued $6.2 million and 1.40 million euros as advance payment guarantee to Melamchi Water Development Board to provide the counter guarantee to CCB. The CCB was the guarantor for the project contractor China Railway 15 Bureau Group.
According to the international law, the guarantee provided to both Nepali banks by CCB is an independent and unconditional obligation. The bank should receive the money back from China as per the international law and practice, but the Chinese company has been delaying due to court procedure.
The China Railway 15 Bureau Group had been contracted to build a 27-km-long tunnel for the Melamchi project, before appointing the Italian contractor Cooperativa Muratori and Cementisti di Ravenna.
The agreement between Melamchi Drinking Water Project and China Railway 15 Bureau Group was cancelled after the Chinese contractor demanded more funds than agreed in the bid document to complete the work after missing the completion deadline.
Henan Province’s People’s High Court ordered the review of the February 15 decision of district-level Zhengzhou Intermediate Court – in favour of China Construction Bank (CCB) – for which HBL and BoK had given counter guarantee in the Melamchi Drinking Water Project.
Himalayan Bank said that the decision of the Chinese high court to review the case is a positive step, and it is optimistic about receiving the counter guarantee amount soon.
Earlier on February 15, the Zhengzhou Intermediate Court had decided in favour of the Chinese contractor in the lawsuit filed against China Railway 15 Bureau, citing violation of underlying contract between China Railway and Melamchi Drinking Water Project.
HBL had issued $6.665 million as performance guarantee, while BoK had issued $6.2 million and 1.40 million euros as advance payment guarantee to Melamchi Water Development Board to provide the counter guarantee to CCB. The CCB was the guarantor for the project contractor China Railway 15 Bureau Group.
According to the international law, the guarantee provided to both Nepali banks by CCB is an independent and unconditional obligation. The bank should receive the money back from China as per the international law and practice, but the Chinese company has been delaying due to court procedure.
The China Railway 15 Bureau Group had been contracted to build a 27-km-long tunnel for the Melamchi project, before appointing the Italian contractor Cooperativa Muratori and Cementisti di Ravenna.
The agreement between Melamchi Drinking Water Project and China Railway 15 Bureau Group was cancelled after the Chinese contractor demanded more funds than agreed in the bid document to complete the work after missing the completion deadline.
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