Financial Guarantees

Notes


1 This chapter provides an overview of the key aspects of guarantees in relation to offshore construction contracts. For a detailed discussion of the topic see Geraldine Andrews, Richard Millett, Law of Guarantees. (6th edn, Sweet & Maxwell 2012).


2 See Spliethoff’s Bevrachtingskantoor BV v Bank of China Limite. [2015] EWHC 999 (Comm).


3 ibid para [84] (Mrs Justice Carr): ‘This is an area where the labelling used is generally accepted as being confusing.’


4 ‘Paget’s presumptions’, discussed below at paras 16.38 to 16.39.


5 WS Tankship II BV v Kwangju Bank Ltd. [2011] EWHC 3103 (Comm), at [143], [2012] CILL 3155.


6 [2009] EWCA Civ 189, [2009] 1 Lloyd’s Rep 595.


7 In reaching this decision, the court applied the House of Lords’ decision in Moschi v Lep Air Service Limited. [1973] AC 331, [1972] 2 All ER 393.


8 This is known as the rule in Holme v Brunskil. (1878) 3 QBD 495. It established the rule that any amendments to the underlying contract after the giving of the guarantee will discharge the guarantor’s liability under the guarantee unless either the guarantor consents to the variation or the variation is clearly insubstantial, immaterial or incapable of having the potential adversely to affect the position of the guarantor. This was more recently applied in Lloyds TSB Bank Plc v Hayward. [2005] EWCA Civ 466 and followed in Topland Portfolio No 1 Ltd v Smiths News Trading Lt. [2013] EWHC 1445 (Ch), [2014] IP & CR 2. See also paragraph 16.8 above.


9 Moschi v Lep Air. (n 7).


10 [2010] EWHC 3362 (Comm), [2011] 1 All ER (Comm) 1049.


11 Note 8.


12 Unreported, 4 February 1981, Neill J, 1980 Claim Number 1992, Official Transcripts (1980–1989)


13 [2005] EWCA Civ 630, [2005] 2 CLC


14 Note 8.


15 [2001] EWCA Civ 1806, [2002] 1 Lloyd’s Rep 617.


16 Wuhan Guoyu Logistics Group Co Ltd and Anor v Emporiki Bank of Greece SA. [2012] EWCA Civ 1629, [2014] 1 Lloyd’s Rep 266.


17 Meritz Fire and Marine Insurance Co Ltd v Jan de Nul NV and Anor. (n 10) para [76].


18 The court came to the same view in Spliethoff’s Bevrachtingskantoor BV v Bank of China Limited.  (n 2).


19 Vossloh Aktiengesellschaft v Alpha Trains (UK). Limited, [2010] EWHC 2443 (Ch), [2011] 2 All ER (Comm) 307, Sir William Blackburne at para 27. CIMC Raffles Offshore (Singapore) Ltd and another v Schahin Holding SA. [2012] EWHC 1758 (Comm) and [2013] EWCA Civ 644, [2013] 2 Lloyd’s Rep 575 (CA).


20 Wuhan Guoyu Logistics Group Co Ltd and Anor v Emporiki Bank of Greece SA. (n 16) at para [26].


21 ibid para [25].


22 Ali Malek, John Odgers, Paget’s Law of Banking. (14th edn, LexisNexis 2014) ch 34.


23 ibid para 34.8.


24 Wuhan Guoyu Logistics Group Co Ltd and Anor v Emporiki Bank of Greece SA. (n 16) para 30.


25 ibid para 31.


26 Spliethoff’s Bevrachtingskantoor BV v Bank of China Limited. (n 2).


27 A recent example of this type of bond can be found in MW High Tech Projects UK Limited and Anor v Biffa Waste Services Limite. [2015] EWHC 949 (TCC).


28 Wuhan Guoyu Logistics Group Co Ltd and Anor v Emporiki Bank of Greece SA. (n 16) para [22]: ‘It is critical to the efficacy of these financial arrangements that as between beneficiary and bank the position crystallises as at presentation of documents or demand and that it is only in the case of fraudulent presentation or demand by the beneficiary that the bank can resist payment against an apparently conforming presentation or demand’.


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