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The Foreign Bank Guarantee is a crucial document in international business transactions involving Saudi Arabian parties. It is commonly used when foreign companies engage in business activities in Saudi Arabia, particularly in construction projects, supply contracts, or service agreements. The guarantee provides security to Saudi Arabian beneficiaries by ensuring that a reputable foreign bank will honor the underlying obligations of the foreign principal. The document must strictly comply with SAMA regulations and Shariah principles, often requiring the involvement of a local correspondent bank for validation and enforcement. Special attention must be paid to the guarantee's structure to ensure it remains enforceable under Saudi law while meeting international banking standards. This type of guarantee is particularly important in large-scale projects where Saudi entities require security from foreign contractors or suppliers.

1. Parties: Identification of the Guarantor Bank, the Beneficiary, and the Principal (the party whose obligations are being guaranteed)

2. Background: Context of the guarantee, including the underlying transaction or obligation being guaranteed

3. Definitions: Key terms used throughout the guarantee, including banking, financial and legal terminology

4. Guarantee Amount and Currency: Specific amount of the guarantee and the currency in which it is denominated

5. Scope of Guarantee: Detailed description of the obligations being guaranteed and the extent of the bank's liability

6. Term and Validity: Duration of the guarantee, including effective date and expiry conditions

7. Demand Requirements: Procedures and conditions for making a claim under the guarantee

8. Payment Terms: Timeline and process for payment upon valid demand

9. Shariah Compliance Declaration: Statement confirming compliance with Islamic banking principles

10. Representations and Warranties: Standard banking and regulatory representations required under Saudi law

11. Assignment and Transfer: Restrictions on transfer or assignment of rights under the guarantee

12. Governing Law and Jurisdiction: Confirmation of Saudi law as governing law and jurisdiction of Saudi courts

13. Notices: Communication procedures between parties

14. Language: Specification of Arabic as the official language with optional English translation