The issuance of a bank guarantee establishes a distinct and separate duty for the bank that issued it, as well as the guarantor and major debtor. It is recognized as an independent liability issued by the guarantor to the creditor, often referred to as the beneficiary, by the principal debtor. Due to its commercial nature, the bank guarantee in the UAE is controlled by Civil Transaction Law No 5 of 1985, regardless of the capacity of the party to whom such an instrument is granted or the cause for which it is issued. The latest revisions to the UAE's cheque provisions came into effect on January 2, 2022, according to the Central Bank of the UAE. The issuing of any sort of transaction or underlying contract between the beneficiary and the principal debtor will have no effect on the bank guarantee. The guarantor will be obliged by the bank guarantee regardless of any arrangement or contract between any of the three parties, namely the guarantor, the principal debtor, or the beneficiary, or regardless of the position of the primary debtor. The guarantor is assumed to be a separate principal debtor from the real principal debtor, and they are not agents or representatives of each other. Both the guarantor and the major debtor are held jointly and severally liable, and they are mutually exclusive. This is thought to be the most significant distinction between a guarantee and a bank guarantee, because a guarantee, unlike a bank guarantee, creates an incidental responsibility.

 Legal aspects of Bank Guarantee:

1. Amount of bank guarantee: A bank guarantee with no amount is not considered lawful in the UAE. It is specifically stated that a bank guarantee must be for a specific amount.
2. Failure to make payment: In the event that the guarantor fails to make a payment under the bank guarantee, the beneficiary may reach out to the well-experienced lawyers to file a court application against the guarantor. Furthermore, because the beneficiary and the guarantor have separate duties, there is no requirement for the beneficiary to bring a lawsuit against the principal debtor before launching a case against the guarantor.
3. Time constraint: According to UAE legislation, the time restriction is not a mandatory component of the Bank Guarantee. However, if the instrument has a time duration, it will automatically terminate when that time period expires. There is also a probability of the guarantor's responsibility being eliminated under article 418 of the CTL when the case involves no renewal of the instrument before the guarantee expires or when the beneficiary has not filed a request for payment within the stipulated time. Furthermore, it is suggested that if the time factor is not there, the ordinary law of limitation will apply to the bank guarantee. However, because there is no such restriction time, it is assumed to be 10 years from the date of issuance of the instrument.
4. Assignment of instrument: The document will not be legitimate in the hands of a third party if the beneficiary has assigned it to the third party without the guarantor's prior consent, according to Article 416. In addition to the consent requirement, it is stipulated that the consent must be in writing. Furthermore, the guarantor might grant such a right to the beneficiary at the time of signing the bank guarantee by including it in the guarantee. The notion of assigning a bank guarantee to a third party also entails that after the beneficiary has assigned the instrument to the third party, the third-party becomes a new beneficiary and takes the place of the previous ones. This means that the beneficiary will have to relinquish all rights and claims relating to the instrument to the third party, and the guarantor will be solely liable to the third party and will be required to fulfill their obligations to the third party at their request.
5. Invocation: The beneficiary is the only party who can invoke the bank guarantee, and the bank is obligated to pay the beneficiary based on this invocation, regardless of any default or act or omission by the primary debtor in this regard. Initially, this instrument is supposed to be free of conditions; however, if a condition exists that requires a beneficiary to act on the condition in a specific manner or submit certain documents to the bank, the bank will not honor the payment request until and unless that act or submission is completed. Such conditions are stated to be mentioned in the bank guarantee itself, and it is the guarantor's job to verify that they are not met. The bank can only refuse to pay the beneficiary on the successful invocation of the instrument if the court orders it; otherwise, the bank must make all payments related to the invocation.
6. Payment: When the bank guarantee is invoked, the guarantor must make all payments due under the guarantee within the time period specified in the guarantee. As a result, it is the responsibility of all three parties, namely the guarantor, the beneficiary, and the principal debtor, to establish a time limit for the guarantee's payment upon the beneficiary's request.
7. Injunction: In rare unusual instances, the court may impose an annexation on the bank guarantee sum with the guarantor. Only significant and unusual grounds can be used to obtain an interim injunction against the guarantor on the major debtor's appeal, according to Article 416, which is subject to the court's view. This clause was found to be valid by the Court of Cessation in an appeal no. 247/2007, which said that the court will not prevent the bank from paying the beneficiary at the request of the principal debtor unless the principal debtor has a compelling and extraordinary reason to do so.