Questions & Answers
What to do if the bank guarantee provided to Dubai Government Authority has been misplaced?
“The guarantee is valid until 24.11.2021 and shall, before expiry, be automatically renewed until advised by you that the contract has been fulfilled.
We have received an email from the Dubai Government Authority stating that the Original Bank guarantee has been misplaced, along with the reason that, due to the COVID period, many staff were working remotely at home, and the Dubai Government Authority has sent NOC for the release of the bank guarantee stating that"
“Kindly release the bank guarantee No..... as the supplier has fulfilled the condition of the contract without any claim.”
Further, the applicant has provided an undertaking cum indemnity to cancel the bank guarantee and release the underlying cash margin.
So in the above case, the applicant has given the undertaking cum indemnity and beneficiary also confirmed by email that they have lost the guarantee so in such case.
What further action does the bank need to take?
Being the government authority, the bank may get less support in terms of documentation, so please advise.
Dear Questioner,
Thank you for your inquiry.
In the scenario you described, since the government authority (beneficiary) has issued an official NOC confirming that the contract conditions have been fulfilled and that there are no outstanding claims, and the applicant has provided an undertaking/indemnity due to the loss of the original bank guarantee, the bank may proceed with cancellation.
However, as a standard precaution, the bank should:
- Verify the authenticity of the NOC received from the government authority.
- Ensure that the applicant’s undertaking clearly indemnifies the bank from any future liability related to the lost guarantee.
- Seek internal legal clearance before proceeding with the cancellation and release of the cash margin.
Given that the beneficiary is a government body, the bank may exercise additional care in documentation, but the process remains valid and can be completed based on the NOC and indemnity provided.
Should you need assistance reviewing the documents or coordinating with the bank, we’d be happy to assist.
Best regards,
Mohammed Salah
Legal Consultant
The guarantee is valid until 24/11/2021 and is automatically renewed before its expiry unless you are notified of contract termination.
We received an email from a Dubai Government Authority stating that the original bank guarantee has been lost due to many employees working remotely from home during the COVID-19 pandemic.
The authority has issued a No Objection Certificate (NOC) for issuing the bank guarantee, stating:
"Please issue the bank guarantee No. … as the supplier has fulfilled the contract terms without any claims."
The applicant has also submitted an indemnity letter for the cancellation of the bank guarantee and the release of the cash margin.
In the above case, where the applicant has submitted an indemnity letter and the beneficiary has also confirmed via email the loss of the original guarantee, what action should the bank take?
As the beneficiary is a government entity, the bank may not receive sufficient documentation support. Kindly advise.
Recommended Action for the Bank (in English):
Verify Submitted Documents:
Confirm that the No Objection Certificate (NOC) is issued directly by the beneficiary (the government authority), properly signed and stamped.
Review the indemnity letter to ensure it explicitly states the applicant's commitment to indemnify the bank against any liability resulting from cancelling the guarantee without the original document.
Review Guarantee Terms:
Examine the original guarantee terms to determine if the return of the original document is legally required for cancellation.
In cases where the original is lost, banks may proceed based on alternate safeguards such as an indemnity and official NOC.
Legal Risk Assessment:
Refer the case to the bank’s legal department to assess any legal exposure from cancelling the guarantee without retrieving the original.
Special attention should be paid due to the involvement of a government entity, which may have strict or limited documentation processes.
Proceed with Cancellation (If Low Risk):
If the legal review finds minimal risk, the bank may:
- Officially cancel the bank guarantee.
- Release the cash margin held, provided no claims exist.
Maintain Documentation:
Keep copies of the NOC, indemnity letter, and related correspondence on record to safeguard the bank in case of future inquiries or audits.
Please contact us by phone.
In the presented case, considering that:
The beneficiary (Dubai Government Authority) has sent an official email requesting the release of the bank guarantee, confirming that “the supplier has fulfilled all contractual obligations without any claim”; and
The applicant (issuer of the guarantee) has provided a formal Undertaking Indemnity requesting cancellation of the bank guarantee and release of the cash margin; and
The original guarantee document is reported lost, with a valid justification (remote work during the COVID-19 period).
Then, the bank may proceed with the following action:
Recommended Action for the Bank:
- Accept the official email from the government authority as sufficient in lieu of the original guarantee, provided it clearly states the guarantee number, confirms full performance, and that there are no current or future claims.
Keep a copy of the NOC from the beneficiary on record, along with the undertaking cum indemnity provided by the applicant.
Proceed to internally cancel the bank guarantee and release the related cash margin, as per the bank’s internal policy and procedures.
Important Note:
Our law firm, Rashid Al Kaitoob Advocates, has recently handled a similar case involving a government entity, where the original bank guarantee was lost.
The case was resolved smoothly based on these same three assurances (beneficiary's NOC, applicant’s undertaking, and no pending claims).
Legal Disclaimer:
This response is provided by Rashid Al Kaitoob Advocates & Legal Consultants based solely on the information shared and does not constitute a final legal opinion. A binding legal assessment requires reviewing all the supporting documents.
Contact us by phone or email.
The bank must proceed with canceling the bank guarantee without the original copy, provided:
- An official no-objection certificate is available from the government agency.
- A signed compensation undertaking is received from the customer.
- Approval from the Legal Affairs or Compliance Department is obtained.
- All documents are retained in the guarantee file for future reference.
Thank you for laying out the facts so clearly.
In practice, when the original guarantee has gone missing but both parties confirm the contract is complete, the bank’s task is to close its risk cleanly and traceably.
Authenticate the beneficiary’s release.
Have the releasing email printed on official letterhead or, if that is impracticable, verify its origin through the government authority’s designated contact person and keep the confirmation in your file.
Hold-harmless documentation.
Keep the applicant’s undertaking-cum-indemnity on record and, if possible, obtain a short countersigned letter of indemnity from the beneficiary as well.
Even a brief “we confirm we have no claim and will indemnify the bank should the original resurface” is helpful.
Internal cancellation memo.
Issue an internal release notice referencing the guarantee number, expiry 24-11-2021, and the fact that it auto-renewed “until advised otherwise.” Cite the authenticated NOC and both indemnities as grounds for cancellation.
System updates and collateral release.
Flag the guarantee as cancelled in the core banking system, remove any contingent liability entry, and instruct Treasury to release the cash margin back to the applicant against proof of settlement of all fees.
Quiet period check.
Many banks wait a short courtesy period—often seven to ten calendar days—before releasing funds, simply to ensure no late claim arrives. After that, refund and close the file.
Because the instrument involved a government beneficiary and the physical document is lost, the only real exposure now is a hypothetical third-party claim alleging fraud or forgery.
The dual indemnities and a verified release virtually eliminate that risk, provided your records are watertight.
If you would like a tailored cancellation template or support in liaising with the authority, please reach me on WhatsApp or phone, and we can finalise matters swiftly.
