The Court of Appeal this July closed an eighteen year chapter on a personal guarantee. In October 2008 a businessman signed, by fax, a guarantee capped at USD 20 million covering another businessman’s obligations to Bank of Cyprus. Those obligations crystallised within months: ABN AMRO called three letters of guarantee totalling USD 30.15 million which the Bank had issued on the debtor’s instructions, the Bank paid, debited the debtor’s account, and demanded. The guarantor was sued in 2009, held liable by the District Court in 2019 for the full USD 20 million plus interest capitalised twice a year, and on 8 July 2026 the Court of Appeal dismissed his appeal with costs (Civil Appeal 273/2019).
The arguments that failed are the ones guarantors usually count on: that the demand under the guarantee was never properly activated, and that the trial court ignored core defence positions. The court found the demand letters preceded the action by months, and the remaining grounds unreasoned.
Two practical lessons. A guarantee can be called on exposures created by bank instruments issued at the debtor’s request, not only on money the debtor drew. And it is a long life obligation: it survives the sale of the debt, gathers interest for decades, and the time to negotiate its cap, demand mechanics and expiry is before signing. Afterwards, the courts will read what you signed.
If you are being asked to guarantee a facility, or a lender has called on one you gave:
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