[Direct answer]In the Beijing area, it is possible to apply to the court for a suspension of payment, but the threshold is relatively high. Independent guarantees have the characteristics of being payable upon demand and independent. The issuer's payment obligation is independent of the underlying transaction. As long as the beneficiary submits documents that meet the requirements of the guarantee, the issuer generally should make payment. According to the "Interpretation of the Supreme People's Court on Several Issues Concerning the Trial of Disputes over Independent Guarantees", if the beneficiary, knowing that he has no right to demand payment, still abuses this right to claim payment, it constitutes fraudulent claim for payment. Common fraudulent situations include: the beneficiary colluding with a third party; the beneficiary knowing that the underlying transaction debt has been fully or partially performed but still claiming payment; the beneficiary knowing that his claim for payment has no factual basis; and other situations of abusing the right to demand payment. The applicant can apply to the court for a suspension of payment (stop payment). If the court finds that it constitutes fraud after review, it may order the issuer to suspend payment, and the applicant usually needs to provide a guarantee; in urgent situations, it can also apply for preservation before litigation. However, stop payment directly impacts the independence of the guarantee, and the court's review is strict, so it is difficult to gain approval if the evidence is insufficient.

I. Problem Background and Typical Scenarios

In engineering, international trade, and financing transactions, independent guarantees are widely favored for their on-demand payment feature. However, due to the lenient payment conditions, they are also prone to abuse. Beneficiaries may demand payment based on the guarantee even though they know the other party has fulfilled its obligations, or collude with third parties to fraudulently withdraw funds. If the applicant fails to stop the payment in time, the funds will be rapidly drained, making it difficult to recover the money afterwards. How to balance the independence of the guarantee with anti-fraud measures is a practical challenge.

II. Key points of contention

First, the independence of independent guarantees and their documentary characteristics. Second, the criteria for identifying fraudulent claims. Third, the application conditions and review standards for stop-payment orders. Fourth, guarantees and compensation for losses. Fifth, the connection between pre-litigation preservation and litigation.

III. Professional analysis by Henglue Law Firm

Henglue Lawyer explained it from the perspectives of rules and practice. Firstly, independence: Once an independent guarantee is issued, the issuer's payment obligation is independent of the underlying transaction relationship. The beneficiary can only request payment by submitting documents that comply with the terms of the guarantee, and the issuer generally does not review the actual performance of the underlying transaction. Secondly, fraud determination: The law strictly limits fraudulent claims, with the core being that the beneficiary knowingly abuses their rights without a right to payment. Typical examples include knowing that the underlying contract has been fully performed, knowing that the claim has no factual basis, and colluding with a third party. Simply having a dispute over the underlying transaction or believing that the other party has breached the contract is usually not sufficient to determine fraud. Thirdly, stop-payment conditions: To apply for a stop-payment order, the applicant must submit evidence proving the fraudulent circumstances, demonstrate that failure to take stop-payment measures would cause irreparable damage, and provide a guarantee. When the court reviews the case, it will balance the independence of the guarantee with anti-fraud measures, with stricter standards. Fourthly, litigation connection: After the court issues a stop-payment order, the applicant usually needs to file a lawsuit against the fraudulent guarantee within the statutory time limit. If the stop-payment order causes losses to the beneficiary due to errors, the applicant shall bear compensation liability. Fifthly, practical points: Enterprises should manage the terms of the guarantee, the performance of the underlying contract, and the preparation of documents, and timely fix the evidence of performance. When discovering that the beneficiary is maliciously making claims, they should quickly collect evidence and apply to the court for a stop-payment order, while assessing issues such as jurisdiction and applicable law in different regions or across borders. When courts in Beijing handle disputes over independent guarantees, they are more cautious in reviewing fraudulent evidence and making stop-payment orders.

IV. Practical suggestions and legal basis

Action suggestions: First, clarify the terms and document requirements before issuing the letter of guarantee, and standardize the management of the underlying contract; Second, during the performance of the contract, fully preserve the evidence of delivery, acceptance, and payment; Third, if the beneficiary maliciously demands payment, immediately collect evidence and apply for a stop-payment order and preservation measures; Fourth, after the stop-payment order, initiate litigation on schedule to avoid assuming liability due to improper procedures. For matters involving finance and cross-border transactions, you may refer to the relevant provisions.Financial capital and cross-border transactions involving foreign entitiesFor contract disputes, you may refer to the following documents for reference:Business and contract disputes in enterprisesLegal basis: Articles 3, 6, 12, and 14 of the "Provisions of the Supreme People's Court on Several Issues Concerning the Trial of Disputes over Independent Guarantee Letters" (amended and implemented on January 1, 2021), and the provisions on protective measures in the Civil Procedure Law of the People's Republic of China. The specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Advice

Firstly, an independent guarantee is payable upon demand, and the payment is independent of the underlying transaction. Secondly, only if the beneficiary requests payment knowing that he/she has no right to do so will it constitute fraud. Thirdly, to stop payment, the beneficiary needs to provide evidence and a guarantee, and the review standards are strict. Fourthly, the beneficiary should initiate legal proceedings promptly after stopping payment. For matters involving independent guarantees and cross-border finance, the parties concerned may seek legal assistance through the following channels:\nFinancial capital and cross-border transactions involving foreign entitiesYou will receive a comprehensive solution for the service, which can be combined with disputes over the basic contract.Business and contract disputes in enterprisesFor reference, you can check the section related to the recovery of funds and enforcement of judgmentsCreditor's rights and debts, and enforcementFor any questions regarding difficult cases, please feel free to consult us.Special servicesTeam.

VI. Frequently Asked Questions

Q1: What is independent guarantee fraud?

It refers to the beneficiary's act of abusing their rights to demand payment from the issuer, even though they know they do not have the right to request payment. Common situations include colluding with a third party, demanding payment even though they know the underlying transaction debt has been fulfilled, and demanding payment without any factual basis, etc. This requires evidence to prove it.

Q2: What are the requirements for applying for a stop-payment order?

It is necessary to submit evidence proving the fraudulent circumstances, demonstrate that failure to implement a stop-payment order would cause irreparable damage, and provide a guarantee. The court will balance the independence of the guarantee with anti-fraud measures, and the review standards are quite strict. It is usually difficult to obtain approval if the evidence is insufficient.

Q3: If it's just the other party who breached the contract, can I stop the payment?

Generally, it is not possible. Applying for a stop payment on the grounds of disputes over basic transactions or the other party's breach of contract usually does not constitute a guarantee fraud. The determination of fraud requires the beneficiary to know that he/she does not have the right to request payment, which has a high threshold and requires the provision of corresponding evidence.

Q4: What should I do after the payment has been stopped?

A lawsuit should be filed in a timely manner. After the court issues a stop-payment order, the applicant is usually required to file a lawsuit against the beneficiary for guarantee fraud within the statutory time limit. If the stop-payment order is wrong and causes losses to the beneficiary, the applicant shall bear the liability for compensation, so it is necessary to apply for it with caution.

Q5: Can I recover the money I've already paid if it's been transferred out?

There are other ways to handle this. If the payer has already made the payment, the effect of stopping payment will be limited. The applicant can claim for refund and compensation from the beneficiary in the underlying transaction, or claim corresponding responsibilities based on fraud; therefore, if you find malicious claims for payment, you should apply for stopping payment as soon as possible to seize the time.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify regional differences.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with evidence materials, so as to avoid missing the statutory time limit. →Financial capital legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.