You are here:

Construction Law/Performance Security


I am sorry to disturb you again as there is not further follow up question, I can only copy the Q & A with you in the past for your information.

Expert:   Florin NICULESCU
Subject:   Performance Bond Security
Question:   I append below the Q & A that we have for your convenience as I do not know how to have further follow up question:

QUESTION: In our Fidic red book contract we have a
Performance Security (Bank Guarantee) requirement as follows:

Procurement Reference No:

WHEREAS (hereinafter called “the Contractor”) has taken, pursuant to Contract No. dated  to supply (hereinafter called “the Contract).

AND WHEREAS it has been stipulated by you in the aforementioned Contract that the Contractor shall furnish you with a security issued by a reputable guarantor for the sum specified therein as security for compliance with the Contractor’s performance obligations in accordance with the Contract.
AND WHEREAS the undersigned, legally domiciled in [insert complete address of Guarantor], (hereinafter called the “Guarantor”), have agreed to give the Contractor a security.

Question is what do you mean by legally domiciled in and domicile in which country, is it in the Country where the project is executed?

There is also a write up in the special conditions as follows:

A foreign Bank providing the security shall have a correspondent Bank located in the country.

What do you mean by a correspondent Bank? What will this bank's responsibility?

ANSWER: Hello Wong,

Thank you for your question.

Firstly, as per definition     "Country" means the country in which the Site (or most of it) is located, where the Permanent Works are to be executed.

Legally domiciled is where the bank of another entity is seated/ registered.

Correspondent Bank is a local bank that has a partner bank in the Country.

Hope that answer your queries.

---------- FOLLOW-UP ----------

QUESTION: The Statement in the format

AND WHEREAS the undersigned, legally domiciled in [insert complete address of Guarantor], (hereinafter called the “Guarantor”)

did not specified the country. Do you mean legally domiciled is legally domiciled in the country of the Site (project). Can it means any other country of domicile?

Please clarify further the meaning of your statement - Legally domiciled is where the bank of another entity is seated/ registered. If I use a bank that is not in the country of the Site, is it acceptable. as per the format in the contract?

I cannot understand your statement, please explain - Correspondent Bank is a local bank that has a partner bank in the Country.

Following is the reason:

Dear Wong,

I do not understand what is not clear. The bank issuing the guarantee must be either registered in the Country, or have a partner bank in the Country.

Please read the phrases in the guarantee form, word by word and where needed, use a dictionary to ensure you understand the meaning.

If you still have doubts, you're always welcome to come back.

Expert: Florin NICULESCU.

I am sorry I cannot fully understand your explanation. What is stated in the format of the tender document is only legally domiciled in [address}. No where was it stated that it has to be legally domiciled in the Country. I do not understand why you bring up the definition of the Country My question is can the bank providing the Security be legally domiciled in other country instead in the Country of the Site?

ANSWER: Dear Wong,

Welcome back, thank you for summarising your question.

The bank issuing the guarantee must be:

Option 1: legally registered (seated/ domiciled) in the Country. As per indicated definition, "Country" (with capital "C") means the country where the Works are executed.

Option 2: registered in another country, but must have a correspondent bank in the Country, that meaning they are having a partner bank in the Country, through which they are operating in the Country.

In respect of that, it means it is not acceptable a bond issued by no matter what bank registered in some "fiscal heavens" or other countries where there is no control, but must be a bank that has a connection in the Country and operates in the Country through a bank registered in the Country.

Again, please pay attention to the difference between "Country" and "country".

Hope now is all clear.

---------- FOLLOW-UP ----------

QUESTION: The format of the Performance Security did not mention "in the Country". It stated only legally domiciled follow by [insert address]. I understand option 2 but in option 1 you added "in the Country", this is not written in the document why you added "in the Country".

Best regards
Answer:   Aside that, trust everything is clear now.
Civil Engineer, Disputes Adjudicator,
Procurement Expert

I still have this question: As per the format of the Performance Security, can we use a foreign bank? Since the format only state legally domiciled in [insert address] but did not state legally domiciled in the Country of the Site. Our foreign bank is legally domiciled in the foreign country and we just fill in the address of the foreign bank in the country that the bank is legally domiciled. What is your opinion in this case?

Thank you

Best regards

Dear Wong,

I must confess I am somewhat puzzled. Do you still have a question? The same question?!


Just read my previous answers

Construction Law

All Answers

Answers by Expert:

Ask Experts




Questions related to Civil Engineering Contracts, using FIDIC or other Conditions of Contract, concerning Procurement procedures and documents (pre-qualification, tendering and contracting) and Services/ Works Contracts implementation matters including Determinations, Payments, Time Extensions, VOs, Claims/Disputes. Additionally, questions related to dealing with International Financing Institutions. Can also answer questions in Romanian. Can not answer improperly formulated questions.


Over 20 years of experience in the field of design, works supervision, construction, management of aid funds and technical assistance for various types of contracts implementation, including severe conflictual contractual situations leading to Claims and disputes. Claims/ Contract management, Disputes adjudication, Arbitration.

Member of Romanian Professional Association of Roads and Bridges; Listed on President's List of Adjudicators of Romanian Association of Consulting Engineers Former member of the Disputes Resolution Board Foundation (DRBF) of United States – nominee on DRBF President’s Disputes Board Members List and of DRBF Chapter for Eastern Europe Former member of Polish Association of Consulting Engineers (SIDiR) – nominee on SIDiR President’s Disputes Board Members National List Member of “” volunteers pool Member of the "Constructions Disputes Resolution Services” International Panel of Construction ADR Specialists" of United States

- Graduate in 1994 the Construction Institute - Graduate of several FIDIC,Procurement and other courses - Graduate of first Disputes Board Members Mentoring Scheme ( - FIDIC Accredited Adjudicator

Past/Present Clients
- Several State organisations/Ministries , such as Ministry of Transport, National Admistration of Roads, Ministry of Regional Development (former Ministry of European Integration), Public Works and Housing, Central Contracting and Financing Unit in Romania and also in Turkey, Croatia and Macedonia - Numerous Western based private consultancy companies - full CV and other relevant information available at

©2017 All rights reserved.