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A counter-indemnity is an obligation to make a reimbursement in relation to a primary indemnity, guarantee, bond or any similar arrangment.

For example, we may be a corporate supplier in a commercial contract.

As part of the contractual arrangements, our bank may issue a performance bond to our customer.

This gives rise to a contingent liability for our bank.

The bank will require a counter-indemnity from ourselves, in favour of the bank.

If the performance bond is called, we must indemnify the bank under the counter-indemnity.

A counter-indemnity is sometimes also known more simply as an 'indemnity'.

See also