Solution
The Escrow account under Luxembourg law, created and managed for you by BGL BNP Paribas, allows you to secure your transactions. By transferring your assets (cash or other) to a fiduciary account at our bank, you are protected against any incidents that might affect one or other of the parties.
How does it work?
- Two parties – the vendor and the purchaser, for instance – sign a fiduciary escrow agreement with BGL BNP Paribas.
- BGL BNP Paribas opens an account for the transactions.
- The purchaser transfers the funds to the account and waits for the vendor to meet its obligations (delivery of goods, services, etc.).
- BGL BNP Paribas confirms to the vendor that the funds have been transferred in accordance with the fiduciary agreement.
- The goods, services, etc. are delivered in accordance with the agreement.
- The purchaser confirms to BGL BNP Paribas that the vendor has met its obligations and that the funds may be released, or else the purchaser and vendor send joint confirmation of this to BGL BNP Paribas.
- BGL BNP Paribas releases the funds according to the instructions given in advance. If the obligations are not met, the funds will be returned to the purchaser.
- In the event of a dispute, default or any other circumstance preventing the release of the funds, the latter will remain frozen until such time as a judge orders their release (based on the agreement between the parties).
Advantages
- Maximum security: if you want to cover the risks related to a third party claim on the funds (such as in the event of bankruptcy or distraint) this solution offers security.
- An alternative when a bank guarantee or documentary credit is not desirable or conceivable.
Good to know
The Fiduciary Escrow Agreement (“FEA”) is a contract concluded by both parties to a transaction with BGL BNP Paribas acting as Escrow Fiduciary. It is based on the Luxembourg Act of 27 July 2003 on trusts and fiduciary agreements and on the Luxembourg Act of 5 August 2005 on financial collateral agreements.
Useful link(s)
If you:
- Need more details or additional information or documentation on the FEA
- Wish to address specific issues or need advice on an FEA, or on escrow in general
- Want to discuss a specific transaction and/or risk and test the feasibility of covering the financial risks with an FEA
- Want a free quote or details about first steps to take
Feel free to contact your relationship manager.
