Trade and Industry written question – answered at on 21 July 2005.
To ask the Secretary of State forTrade and Industry what procedures the Export Credits Guarantee Department follows where the contractor defaults due to cancellation of a contract by the purchasing country on the grounds of non-performance.
Non-performance is not an insured risk under an ECGD insurance policy. Termination of a contract only becomes relevant when an exporter makes a claim under the policy for amounts unpaid under the contract. ECGD would consider the terms of the policy and the terms of the contract in order to determine whether the exporter had a valid claim under the policy.
The same procedures apply to overseas investments that are covered under an ECGD Overseas Investment Insurance policy.
Where ECGD provides a guarantee to a bank, it may be entitled to recoup from the exporter the amount of any guarantee payments which it might make to the bank up to a pre-agreed limit (usually 10 per cent. of ECGD's maximum liability).
ECGD would attempt to minimise loss or make recoveries by, among other things, directing the exporter to pursue any available remedies including arbitration or other proceedings.
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