(Adopted by the Judicial Committee of the Supreme People's Court at its No.1133 Conference on September 29, 2000) For the purpose of ensuring the correct application of the Guarantee Law of the People's Republic of China (hereinafter referred to as "the Guarantee Law"), based on the judicial practice and experience, the following interpretations have been made concerning the application of laws while the people's courts are handling the guarantee disputes . Part IInterpretation of General Principles Article 1A guarantee created by the parties for the creditor's rights arising from civil relations may be considered valid if it conforms to the forms stipulated in the Guarantee law and does not violate any compulsory provision in laws and regulations. Article 2Counter-guarantee provider may be the debtor or some other parties. The form of counter-guarantee may be mortgage or pledge offered by the debtor, or guarantee, mortgage or pledge offered by some other parties. Article 3Where any state organ or any institution, social organization for the public good violates laws to provide guarantee, the guarantee contract shall be invalid. And it shall be punished pursuant to Article 5 (2) of the Guarantee Law if any loss is caused to the creditors. Article 4Where any director or manager violates Article 60 of the Company Law of the People's Republic of China to provide guarantee for the debt of the company's shareholders or other persons, the guarantee contract shall be invalid. The debtor and the guarantee provider shall bear joint compensation liability for creditor's loss unless the creditor knows or should know about the fact. Article 5Where a guarantee is created with the property that is prohibited b...
