Article 3 Except that the letter of guarantee fails to state the documents and the maximum guaranteed amount necessary for making payment, the people's court shall uphold the assertion by the parties concerned that the nature of the letter of guarantee is independent in nature if-
1.
the guarantee states payment on demand;
2.
the guarantee states that the model rules for independent guarantee transactions, such as the International Chamber of Commerce (ICC) Uniform Rules for Demand Guarantees, apply;
3.
pursuant to the content of the guarantee, the payment obligation of the issuer is independent of the underlying transaction relation and the legal relation resulting from the guarantee application and the issuer only assumes the payment obligation matching the documents presented.
The people's court shall not uphold the assertion by the parties concerned that the independent guarantee is in nature a general undertaking or a joint and several undertaking on the ground that it records the underlying transaction.
The people's court shall not uphold the assertion by the parties concerned that the provisions of the Security Law on general undertaking or joint and several undertaking apply to the independent guarantee.
Article 6 Where the documents presented by the beneficiary are in facial conformity with the terms of the independent guarantee and are consistent with one another, the people's court shall uphold the beneficiary's demand for payment by the issuer under the independent guarantee.
The people's court shall not uphold the issuer's defense against its payment obligation relying on the relation resulting from the underlying transaction or the independent guarantee application, except for the circumstances stipulated in Article 12 hereof.
Article 12 The people's court may determine that an independent guarantee fraud is committed in any of the following circumstances:
1.
the beneficiary makes up a false underlying transaction by colluding with the applicant or other people;
2.
the third party's documents presented by the beneficiary are counterfeit or contain false information;
3.
the debtor under the underlying transaction is deemed to be free of payment or indemnity liability by the court decision or arbitration award;
4.
the beneficiary confirms that the debt obligation under the underlying transaction has been fulfilled in full or that the expiry-triggering event stated in the independent guarantee does not occur; and
5.
other circumstances where the beneficiary having no right to demand payment abuses such right on purpose.