Himalayan and Bank of Kathmandu Win The Ongoing Case in China After 10 Years; Banks To Recover Millions of Counter-Guarantees Fund Back

Himalayan Bank (HBL) and Bank of Kathmandu (BOK) have prevailed in the case in China after ten years of struggle. 

After the High Court ruled on July 25, 2022 that the amount due to the guarantee should be returned to the concerned bank, now China Construction Bank has to return the amount due to the counter guarantee.

The Chinese court was hearing the issue involving the recovery of damages related to the Melamchi water supply project. Both banks deployed representatives to China for this purpose.

In this case, the Bhengbao District Court of China had ruled in favor of these two banks on November 6, 2020, but the contractor company China Railway 15 Bureau filed an appeal in the High Court saying that it was not satisfied with the decision.

Himalayan Bank and Bank of Kathmandu had issued a counter guarantee in the name of China Railway 15 Bureau Company against the guarantee of China Construction Bank in 2008.

As soon as the bail for Melamchi is paid, Bank of Kathmandu will receive back its lost 66.25 lakh US dollars and 14.11 lakh Euros as well as additional damages. The Himalayan Bank will also receive 66.55 Thousands US dollars in return.

The Himalayan Bank and the Bank of Kathmandu received a counter guarantee from the Chinese bank, China Construction Bank, which has a guarantee on behalf of the China Railway and was awarded the contract for the Melamchi water supply project. The payment case involving the guarantee was won by these two Nepali banks.