Kommuninvest of Sweden

All municipalities and county councils that are members of Kommuninvest Cooperative Society (as listed below) have individually signed a guarantee, as for liability of their own, to cover all obligations, liabilities and commitments which Kommuninvest i Sverige AB has undertaken or will undertake. The guarantee is worded as follows:

“The undersigned Swedish county councils and municipalities herewith jointly and severally guarantee, as for a liability of their own, all obligations, liabilities and commitments presently and subsequently undertaken by Kommuninvest i Sverige AB as regulated in the Articles of Association of Kommuninvest Cooperative Society.”

The wording of the guarantee defines it as a surety agreement (‘as for a liability of their own’) in which responsibility is shared collectively (‘jointly and severally’). Furthermore, the guarantee is non-specific; it is formulated in a general manner so that it applies to all the company’s current obligations, liabilities and commitments.

The guarantors

The text below reflects the Swedish regulations on guarantees in general and may not be directly applied to the above mentioned guarantee signed by certain municipalities and the county councils in relation to Kommuninvest's obligations.

Joint surety agreement
Since a guarantee constitutes a surety agreement (‘as for a liability of their own’), a creditor (claimant) may turn directly to a municipality (guarantor) for settlement. The creditor does not priory needs to seek payment from the company: the amount outstanding can be claimed in full directly from the municipality. In the event that the municipality is unable to settle the account, the creditor can turn to the courts for settlement.

Several guarantors
If several persons have signed a guarantee for the same general liability, the creditor may turn to any one of the guarantors and demand settlement of the claim in full. This is expressed in the way in which the municipalities are jointly and severally liable for (‘jointly and severally guarantee’) the obligations, liabilities and commitments of the company. In other words, there is no question of the financial responsibility being shared proportionately among the municipalities, where each municipality is individually liable only for part of the total amount.

General guarantee
A general guarantee is formulated to apply to all obligations, liabilities and commitments of the company. It is not limited in time, it is in principle valid until the company or municipality takes a measure.

As the guarantee is formulated in this general manner, the import of this is that a new municipal member becomes responsible not only for obligations, liabilities and commitments that the company subsequently takes upon itself, but also for all the obligations, liabilities and commitments that the company has entered into prior to the date on which this new guarantor signs the guarantee.

In view of the fact that a guarantee has been undertaken for an unlimited period of time and applies in general to a debtor’s present and subsequent obligation, the principal rule according to Swedish legal practice is that a guarantor has the right to demand that the guarantee undertaking be terminated.

Due to Swedish legislation, the effect of a guarantor revoking the guarantee commitment is to make it impossible for the guarantee to be utilized for claims arising after the point in time at which the guarantee commitment was revoked. However, liability under the terms of the guarantee remains for claims that have arisen prior to the point in time at which the guarantee commitment was revoked.

In this sense a general guarantee is ‘revocable’ inasmuch as a guarantor has the right to rescind liability for future commitments which would otherwise be covered by the terms of the guarantee, yet ‘irrevocable’ inasmuch as the guarantor, even after cancellation of the guarantee, continues to remain legally bound by the obligations, which the debtor has incurred up to that point in time when the guarantee was cancelled.

Page last updated 2011.10.13