Council Directive 71/86/EEC of 1 February 1971 on harmonisation of the basic provisions in respect of guarantees for short-term transactions (political risks) with public buyers or with private buyers

Subject to the provisions of Annex D to Council Directives Nos 70/509/EEC and 70/510/EEC of 27 October 1970, Member States shall adopt such measures by law, regulation or administrative action as may be necessary to put into force the harmonised provisions on short-term transactions set out in the Annex to this Directive.

Member States shall ensure that credit insurance organisations guaranteeing for the account or with the support of the State insure transactions that fall within the scope of the harmonised provisions, in accordance with the terms laid down in those provisions and such specific rules as are adopted by the Council.

1 Whatever the type of policy used, the harmonised provisions shall apply to transactions which: include either a credit risk of less than twenty-four months, or a credit risk and a guaranteed manufacturing risk where the cumulative period is less than twenty-four months; the manufacturing risk, however, must be of less than twelve months; are concluded with a public buyer or with a private buyer; are on a supplier credit basis.

2 The provisions harmonised by this Directive concern only the guarantee in respect of political risks.

3 The definitions of ‘public buyer’ and ‘private buyer’ contained in Article 3 of Directive No 70/509/EEC and in Article 4 of Directive No 70/510/EEC respectively shall apply.

The Advisory Committee for Export Credit Insurance, set up under Article 4 of Directive No 70/509/EEC, may be consulted by the Commission on any problem relating to the uniform application of this Directive.

This Directive is addressed to the Member States.

The definition to be included in policies must not provide for a qualifying period for claims shorter than six months.

The basic list shall comprise events C to H inclusive as set out in Article 3 of the Common Policies for Medium- and Long-Term Transactions with Public Buyers and with Private Buyers, and, in the case of public buyers, includes also event B of Article 3 of the Common Policy for Medium- and Long-Term Transactions with Public Buyers. The basic list may, however, be amended by the credit insurance organisation provided such amendment does not involve an extension of the cover beyond that afforded under the above-mentioned list.

The guarantee shall apply to the amount owed to the insured in principal and interest, excluding interest on arrears, penalties and damages payable by the debtor.

The insured himself shall retain exclusively for his own account responsibility for the portion not guaranteed by the credit insurance organisation.

The following principles must be observed: (a) The insured shall be required as regards the conclusion and performance of the guaranteed transaction to exercise all reasonable and usual care, skill and forethought; this requirement shall apply equally to the conduct of his agents, co-contractors or sub-contractors; (b) The insured shall be responsible for obtaining the necessary authorisations and for completing the legal formalities (including those which are incumbent upon the debtor until the entry into force of the contract); (c) Invalid debts shall not be indemnified.

Policies shall include such rules for appropriation as will ensure that any payments or recoveries whatsoever received by the insured will not be appropriated to unguaranteed debts in priority to guaranteed debts.

Policies shall observe the principle that recoveries are shared between the credit insurance organisation and the insured.