Contractors and exporters insurance program
Contractors and exporters insurance program
The contractors and exporters insurance program is a specialized coverage insurance program to help protect an American contractor or exporter from wrongful action by government agencies, and to a lesser degree private buyers, in the developing world. The program represents an exception to OPIC's usual emphasis on medium- to long-term commitments and coverage can be had for a minimum of 6 months. It is intended to cover:
• Disputes pertaining to the underlying contract and conflicts over payment for goods or services including change orders and cost overruns
• Wrongful calling of standby letters of credit supporting bid, performance, and advance payment guarantees
• Loss of assets because of inconvertibility, confiscation, and political violence
OPIC's coverage is for 90 percent of the financial loss in all three cases. In wrongful callings or arbitrary drawings and disputes coverage, there must be a decisional procedure described in the underlying contract that OPIC relies on to determine if there is a valid claim. The exception to this is bid bonds for which there is not yet a contract in existence. The injured exporter or contractor must invoke this decisional process. OPIC determines the extent of the insured's loss based on failure of this procedure to function; impracticality or danger in pursuing the procedure; nonpayment of the award; or an award in favor of the buyer in which it can be shown the decision was influenced by fraud, corruption, duress, or is unsupported by evidence.
This OPIC policy is primarily conceived as insurance against problems with the host government, because in OPIC nations that is the entity most often in charge of projects or contracts. The contractor or exporter can be covered for contracts with nongovernment entities; however, it is very limited because compensation only would be made if nonpayment or noncompliance with the decisional procedures previously mentioned is caused by the host government. In the case of the asset losses, the coverage is restricted to political risk and evidence of aclaim must be clear-cut currency inconvertibility of proceeds from the sale of assets, government confiscation, or physical damage from political violence.
There is no minimum premium for this policy, and it can be obtained on a case-by-case basis. Since this insurance is available for many countries where today's exporter or contractor faces these concerns, coverage might be useiul, even though the coverage is specialized, since it is not available at all in most cases through Eximbank or the private insurance market. Eximbank does not offer unfair calling insurance in any country, and for all practical purposes, if the buyer is not sovereign it is not available in the private foreign insurance market. Contract disputes can be very arbitrary or bureaucratic in developing countries, and arbitration agreements can be one-sided.
This coverage can only assist you in achieving your rights under the contract you have signed. OPIC can be of help in the negotiation process so that your contract is insurable by OPIC and so that you do not cede all of your rights to the arbitration process. This is one reason why OPIC wants to become involved before a contract is drawn.
Relative
bid bonds term commitments political violence host government american contractor coverage insurance private buyers standby letters of credit callings insurance program advance payment letters of credit overruns confiscation noncompliance duress developing world opic government agencies corruption
The contractors and exporters insurance program is a specialized coverage insurance program to help protect an American contractor or exporter from wrongful action by government agencies, and to a lesser degree private buyers, in the developing world. The program represents an exception to OPIC's usual emphasis on medium- to long-term commitments and coverage can be had for a minimum of 6 months. It is intended to cover:
• Disputes pertaining to the underlying contract and conflicts over payment for goods or services including change orders and cost overruns
• Wrongful calling of standby letters of credit supporting bid, performance, and advance payment guarantees
• Loss of assets because of inconvertibility, confiscation, and political violence
OPIC's coverage is for 90 percent of the financial loss in all three cases. In wrongful callings or arbitrary drawings and disputes coverage, there must be a decisional procedure described in the underlying contract that OPIC relies on to determine if there is a valid claim. The exception to this is bid bonds for which there is not yet a contract in existence. The injured exporter or contractor must invoke this decisional process. OPIC determines the extent of the insured's loss based on failure of this procedure to function; impracticality or danger in pursuing the procedure; nonpayment of the award; or an award in favor of the buyer in which it can be shown the decision was influenced by fraud, corruption, duress, or is unsupported by evidence.
This OPIC policy is primarily conceived as insurance against problems with the host government, because in OPIC nations that is the entity most often in charge of projects or contracts. The contractor or exporter can be covered for contracts with nongovernment entities; however, it is very limited because compensation only would be made if nonpayment or noncompliance with the decisional procedures previously mentioned is caused by the host government. In the case of the asset losses, the coverage is restricted to political risk and evidence of aclaim must be clear-cut currency inconvertibility of proceeds from the sale of assets, government confiscation, or physical damage from political violence.
There is no minimum premium for this policy, and it can be obtained on a case-by-case basis. Since this insurance is available for many countries where today's exporter or contractor faces these concerns, coverage might be useiul, even though the coverage is specialized, since it is not available at all in most cases through Eximbank or the private insurance market. Eximbank does not offer unfair calling insurance in any country, and for all practical purposes, if the buyer is not sovereign it is not available in the private foreign insurance market. Contract disputes can be very arbitrary or bureaucratic in developing countries, and arbitration agreements can be one-sided.
This coverage can only assist you in achieving your rights under the contract you have signed. OPIC can be of help in the negotiation process so that your contract is insurable by OPIC and so that you do not cede all of your rights to the arbitration process. This is one reason why OPIC wants to become involved before a contract is drawn.
Relative
bid bonds term commitments political violence host government american contractor coverage insurance private buyers standby letters of credit callings insurance program advance payment letters of credit overruns confiscation noncompliance duress developing world opic government agencies corruption
Comments
Post a Comment