Today’s New York Law Journal featured a story about the Second Circuit ordering the return of a child to Singapore in an international custody dispute. The story calls to mind a rare bond our office can underwrite, even if it may not apply to the details of this particular case (Read the story on the NYLJ website by clicking here). A “Guarantee Return of Child Bond” acts as a financial penalty for a principal to ensure a child safely returns back to the United States.

This bond often arises in custody battles, particularly between Americans of foreign heritage or citizenship. A parent or guardian with joint custody of a child may want to bring the child to another country for a vacation or visit with family members. However, the child’s other parent may object if he or she believes the child may not return to the United States and instead reside permanently with the vacationing parent’s family in their country.

To settle the dispute and appease both sides, a judge basically puts a numeric value on the child’s trip. The judge orders the bond principal to post an undertaking in a determined sum for the benefit of the objecting parent. If the child does not return to the courthouse by a specific date and time, the objecting parent receives a compensatory sum in the amount of the bond penalty.

These bonds require very strict underwriting due to their inherent risky nature. Most underwriters require at least partial collateral, and usually require full cash collateral in the amount of the bond penalty. Because many of the principals on these bonds have dual foreign citizenship, they often use foreign banks. However, sureties can only accept letters of credit from a select few foreign banks. Most sureties will not take foreign indemnity either, because of the difficulties a surety may encounter trying to collect on a claim in another country’s jurisdiction and courts.

The Guarantee Return of Child bond only lasts the length and duration of the trip. Therefore, these bonds could last for as little as a week to as long as summer season. They do not renew and therefore the surety quickly finds out whether it must pay the claim if the child fails to return to the courthouse at the specified date and time.

Our office considers this a miscellaneous commercial surety bond due to its unique nature and details. To learn more about other types of bonds our office issues, visit our services page or enjoy some additional blog posts by scrolling down on this page to read more.