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TTSJV W.L.L. & Others v.
THE HONOURABLE MR JUSTICE PEPPERALL
Bapco Refining B.S.C. (Closed)
Approved Judgment
Neutral Citation Number: [2026] EWHC 2047 (TCC)
Case No. HT-20206-000166
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
Rolls Building
Fetter Lane, London EC4A 1NL
Date: 4 August 2026
Before :
THE HONOURABLE MR JUSTICE PEPPERALL
Between :
|
(1) TTSJV W.L.L. |
Claimants |
- and -
|
BAPCO REFINING B.S.C. (CLOSED) |
Defendant |
Sean Brannigan KC and Jonathan Schaffer-Goddard (instructed by Simmons & Simmons
LLP) for the Claimants
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Tom Owen KC and Alexandra Bodnar (instructed by Herbert Smith Freehills Kramer
LLP) for the Defendant
Hearing date: 22 May 2026
This judgment was handed down at 2pm on 4 August 2026
by circulation to the parties by email and by release to the National Archives.
THE HONOURABLE MR JUSTICE PEPPERALL :
1. By this application made before the issue of proceedings and on short notice, TTSJV
W.L.L. (“TTSJV”) and its parent companies sought an injunction:
1.1 to require BapCo Refining B.S.C. (Closed) (“BapCo”) (a company incorporated in
the Kingdom of Bahrain) to suspend its demand, in the sum of US$484,406,323, on
a performance guarantee issued by HSBC Bank Middle East Ltd; and
1.2 to restrain BapCo from making any further demand on the performance guarantee or
upon a retention bond issued by Mashreqbank pending further order of the court or of
any emergency arbitrator that might be appointed by the London Court of
International Arbitration (“LCIA”).
2. Shortly after the hearing, I indicated that the application would be dismissed. This judgment
sets out my reasons for refusing injunctive relief in this case.
3. This case concerns an Engineering, Procurement & Construction contract dated 2 February
2018 (“the EPC contract”) between BapCo and a consortium comprising the following
companies, who together constituted the contractor:
3.1 Technip USA Inc., a company incorporated in Delaware in the United States of
America;
3.2 Technip Italy S.p.A., a company incorporated in Italy;
3.3 Técnicas Reunidas S.A. (“Técnicas”), a company incorporated in the Kingdom of
Spain; and
3.4 Samsung E&A Co. Ltd (“Samsung”), a company incorporated in the Republic of
Korea.
4. By the EPC contract, the contractor agreed to design, engineer, procure, construct, test and
complete a modernisation programme to upgrade BapCo’s existing oil refinery in Bahrain
for the price of US$4,211,000,000. The parties agreed that the EPC contract should be
governed by and interpreted under the laws of England & Wales. Further, by clause 25 of
and Annex 8 to the EPC contract, they agreed that any dispute would be referred to and
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resolved by binding arbitration under the rules of the LCIA and that the seat of the arbitration
should be London.
5. The First Claimant, TTSJV, is a joint venture vehicle incorporated in Bahrain by the
remaining claimants for the performance of the EPC contract and to whom the contract was
subsequently novated on 10 December 2018. The other claimants, being Technip Energies
N.V., a company incorporated in the Kingdom of the Netherlands; Técnicas; and
Samsung, have provided parent company guarantees and were joined in these proceedings
to fortify the cross-undertaking in damages offered by TTSJV.
6. TTSJV contends that the works are substantially complete. The parties are in dispute as to
whether the contractor is in breach of the EPC contract in failing to achieve completion or
whether TTSJV is entitled to an extension of time:
6.1 BapCo asserts that TTSJV failed to achieve milestone 12 by 26 October 2025 with
the consequence that it became entitled to liquidated and ascertained damages of
US$100 million with further daily delay damages thereafter. By the time of the
hearing, BapCo argued that it was entitled to liquidated damages in the sum of
US$484,406,323, being the contractual cap on such damages calculated as 10% of
the adjusted contract price.
6.2 TTSJV argued that it was entitled to extensions of time because of a devastating
accident on 2 May 2025 when a hydrogen leak from an over pressured hydrocracker
unit ignited causing an explosion that killed three workers. TTSJV contended that
BapCo was responsible for that accident and that site restrictions in its aftermath and
the significant inspections and repair works led to delay for which it is entitled to an
extension of time. While BapCo had rejected the extension claim, TTSJV has
indicated its intention to pursue its claim through arbitration.
7. On 18 May 2026, BapCo formally demanded payment of Delay Liquidated Damages.
Further, on Thursday 21 May 2026, BapCo made a call on the performance guarantee
issued by HSBC. That same day, TTSJV asked the LCIA to appoint an emergency
arbitrator. TTSJV was, however, concerned that if the call was not suspended, HSBC
would be likely to pay some or all of the sum demanded before Eid started on Monday
25 May and before any emergency arbitrator could be appointed.
8. This application was supported by the witness statement of Olivier Vidal, the Executive
Project Director of TTSJV. Sean Brannigan KC appeared for the claimants together with
Jonathan Schaffer-Goddard. The short notice given to BapCo did not allow the company
time to file evidence in response but it was able to secure the services of Tom Owen KC
and Alexandra Bodnar.
9. I am grateful to all counsel for their helpful submissions but particularly thank Mr Owen
and Ms Bodnar for being able to make their excellent and pithy submissions in a complex
and high-value dispute at very short notice.
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10. This application engages section 44 of the Arbitration Act 1996 under which the court
may exercise its powers in support of arbitral proceedings. Sections 44(3), (5) and (6)
provide:
“(3) If the case is one of urgency, the court may, on the application of a party or
proposed party to the arbitral proceedings, make such orders as it thinks
necessary for the purpose of preserving evidence or assets ...(5) In any case the court shall act only if or to the extent that the arbitral
tribunal or the emergency arbitrator and any arbitral or other institution or
person vested by the parties with power in that regard, has no power or is
unable for the time being to act effectively.(6) If the court so orders, an order made by it under this section shall cease to
have effect in whole or in part on the order of the tribunal, the emergency
arbitrator or of any such arbitral or other institution or person having power
to act in relation to the subject-matter of the order.”
11. Given the terms of the bond, there were good grounds for believing that, absent injunctive
relief, funds might well be released before this application could be heard on notice and
potentially even later on 22 May. While the LCIA has developed procedures for the
appointment of an emergency arbitrator in cases of exceptional urgency, I was therefore
satisfied that there was a very real prospect that an emergency arbitrator might not be
appointed and practically able to grant effective relief before the funds were released. I
therefore considered that this was an urgent application and that, notwithstanding the
restriction in section 44(5), the court should entertain this application in support of
anticipated arbitral proceedings. Necessarily any relief granted would have been on a
short-term basis to hold the ring until the emergency arbitrator could act.
12. Equally I was satisfied that this matter was urgent such that the court should hear the
application before proceedings were issued pursuant to rule 25.2(2) of the Civil
Procedure Rules 1998 and that the applicants had acted reasonably in giving only short
notice of this application pursuant to rule 25.6(2).
13. Mr Brannigan argued that the court can grant injunctive relief to prevent the beneficiary
of a bond from making a call where there is a strongly arguable case that, by reason of
the terms of the underlying contract, the beneficiary is precluded from making such a
call. He submitted that the strongly arguable test was most clearly articulated by
Akenhead J in Simon Carves Ltd v. Ensus UK Ltd [2011] EWHC 657 (TCC). He
particularly relied on a quotation said to be from para. 33 of Akenhead J’s judgment but
which, on closer analysis, was inaccurate. Mr Brannigan also relied on statements of
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principle in AES-3C Maritza East 1 EOOD v. Credit Agricole Corporate & Investment
Bank [2011] EWHC 123 (TCC) and Doosan Babcock Ltd v. Comercializadora de
Equipos y Materiales Mabe Limitada [2013] EWHC 3010 (TCC), and [2013] EWHC
3201 (TCC).
14. In his oral submissions, Mr Owen challenged Mr Brannigan’s summary of the law. He
specifically disagreed with the submission that injunctive relief could be granted to
restrain a beneficiary from pursuing a demand under a performance bond merely on the
basis of establishing a seriously arguable case of breach of the underlying contract. He
argued that the authorities went further and required the applicant positively to establish
that there was no entitlement to draw down money under the bond. In support of his
submissions, he cited the Court of Appeal’s decision in Sirius International Insurance
Co. v. FAI General Insurance Ltd [2003] EWCA Civ 470, [2003] 1 W.L.R. 2214,
Ramsey J’s decision in Permasteelisa Japan KK v. Bouyguesstroi & Banca Intesa SpA
[2007] EWHC 3508 (TCC) and Stuart-Smith J’s decision in MW High Tech Projects UK
Ltd v. Biffa Waste Services Ltd [2015] EWHC 949 (TCC).
15. In my judgment, Mr Brannigan misstated the grounds on which, absent fraud, the court
will restrain the beneficiary from calling on a performance bond. Indeed, while
acknowledging the severe time pressure under which this application was prepared, it is
a matter of some concern that the court was misled as to the key statement of principle
from the Simon Carves case. I accept Mr Brannigan’s fulsome apology and entirely
accept that the erroneous quote was an unfortunate error rather than an attempt to mislead
the court. It is, however, particularly critical that judges hearing without notice
applications at speed should be able to rely on counsel’s accurate citation of authority.
Nevertheless, I must still grapple with the core question of whether a seriously arguable
case is sufficient.
16. The general principle is well known. Irrevocable obligations assumed by banks whether
under performance guarantees or letters of credit are, as Kerr J observed in RD Harbottle
(Mercantile) Ltd v. National Westminster Bank Ltd [1978] QB 146, at pages 155-156,
the lifeblood of international commerce. He explained that the court would interfere with
such obligations only in exceptional circumstances, adding:
“Such obligations are regarded as collateral to the underlying rights and obligations
between the merchants at either end of the banking chain. Except possibly in clear
cases of fraud of which the banks have notice, the court will leave the merchants
to settle their disputes under the contract by litigation or arbitration…The courts
are not concerned with their difficulties to enforce claims; these are risks which the
merchants take. In this case the plaintiffs took the risk of the unconditional wording
of the guarantees. The machinery and commitments of banks are on a different
level. They must be allowed to be honoured, free from interference by the courts.
Otherwise, trust in international commerce could be irreparably damaged.”
17. In Harbottle, Kerr J observed that there was no evidence of obvious fraud but only a
contractual dispute in which the rights and wrongs were not clear. In refusing injunctive
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relief, the judge concluded that the plaintiffs would have to pursue their claims against
the buyers as best they could.
18. Approving those observations in Edward Owen Engineering Ltd v. Barclays Bank
International Ltd [1978] QB 159, Lord Denning MR spoke of the need to demonstrate
“established or obvious fraud”. The court’s jurisdiction is, however, wider than that.
19. In Sirius, May LJ again stressed the importance of not undermining letters of credit. He
observed, at [26]:
“Absent fraud by the seller presenting documents to the confirming bank seeking
payment, the court will not restrain a bank from paying a letter of credit which is
payable according to its terms, nor a beneficiary from seeking payment – see Group
Josi Re (formerly Groupe Josi Réassurance SA) v. Walbrook Insurance Co. Ltd
[1996] 1 W.L.R. 1152, 1160-1162. Nor, again absent fraud, will the court restrain
a beneficiary from drawing on a letter of credit which is payable in accordance with
its terms on the application of a buyer who is in dispute with the seller as to whether
the underlying sale contract has been broken – see for both these propositions the
Deutsche Rückversicherung case [1995] 1 W.L.R. 1017, 1030 where Phillips J
considered the authorities. This is the autonomous nature of letters of credit. By
means of it, banks are protected and the cash nature of letters of credit is
maintained. There is no authority extending this autonomy for the benefit of the
beneficiary of a letter of credit so as to entitle him as against the seller to draw the
letter of credit when he is expressly not entitled to do so.”
20. In Sirius, the Court of Appeal confirmed that a contractual undertaking not to draw down
on a letter of credit except with written consent could be enforced by injunctive relief.
Such agreed restriction on the right to demand payment meant that, to that extent, the
letter of credit “was less than the equivalent of cash”. On the facts of Sirius, the applicant
for credit did not simply have a seriously arguable case but had “positively established”
that the beneficiary was not entitled to draw on the letter of credit.
21. In Simon Carves, Akenhead J considered Sirius and extended its application to a case
where there was no collateral agreement not to draw down but where the underlying
contract clearly and expressly provided that the bond would be null and void upon the
issue of an Acceptance Certificate and that it would thereafter be immediately returnable
to the contractor. Given the inaccurate quotation in the skeleton argument deployed by
TTSJV, it is appropriate to set out what Akenhead J actually said when summarising the
authorities at [33]:
“In my judgement one can draw from the authorities the following:
(a) Unless material fraud is established at a final trial or there is clear evidence
of fraud at the without notice or interim injunction stage, the Court will not
act to prevent a bank from paying out on an on demand bond provided that
the conditions of the bond itself have been complied with (such as formal
notice in writing). However, fraud is not the only ground upon which a call
on the bond can be restrained by injunction.
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(b) The same applies in relation to a beneficiary seeking payment under the
bond.(c) There is no legal authority which permits the beneficiary to make a call on
the bond when it is expressly disentitled from doing so.(d) In principle, if the underlying contract, in relation to which the bond has
been provided by way of security, clearly and expressly prevents the
beneficiary party to the contract from making a demand under the bond, it
can be restrained by the Court from making a demand under the bond.(e) The Court when considering the case at a final trial will be able to
determine finally what the underlying contract provides by way of restriction
on the beneficiary party in calling on the bond. The position is necessarily
different at the without notice or interim injunction stage because the Court
can only very rarely form a final view as to what the contract means.
However, given the importance of bonds and letters of credit in the
commercial world, it would be necessary at this early stage for the Court to
be satisfied on the arguments and evidence put before it that the party seeking
an injunction against the beneficiary had a strong case. It cannot be expected
that the court at that stage will make in effect what is a final ruling.”
22. That passage was followed by discussion of Permasteelisa in which Ramsey J observed,
at [51]-[52]:
“51. In my judgment, whilst, as the Court of Appeal indicated in Sirius, a court
might grant an injunction where there is an express term restricting the
circumstances in which a party can draw on a letter of credit and where it is
positively established that the party was not entitled to draw down, the same
will not apply where there is only a serious, arguable case to that effect.
Otherwise the commercial effectiveness of letters of credit would be eroded:
see para 31 ...52. If those principles are applied here, then I consider that the court should not
intervene in the manner the claimant seeks. First, in relation to an order
preventing Bouygues calling the Bond, no case of fraud has been made out
and there is only a seriously arguable case that there has been a breach of the
contractual requirements under clause 20.2.1, which form preconditions to
the call of the Bond.”
23. Akenhead J added that he did not consider that that differed from his own views but that
the Simon Carves case was somewhat different in that it concerned a bond which, as
between the parties, was to be considered null and void in certain circumstances and
returnable.
24. I turn then to the two further cases relied on by Mr Brannigan:
24.1 In Doosan, Edwards-Stuart J cited Akenhead J’s decision in Simon Carves and
identified that a claimant who wishes to restrain a beneficiary from making a
demand under a bond must show that it has a strong case that, under the terms of
the underlying contract, the beneficiary is not entitled to make a demand on the
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bond: see his judgment on the initial application at [2013] EWHC 3010 (TCC), at
[42] and upon the discharge application at [2013] EWHC 3201 (TCC), at [36].
24.2 AES-3C was not a claim for interim relief and does not assist.
25. In MW High Tech, Stuart-Smith J rightly noted that the Court of Appeal in Sirius made
plain that a beneficiary is not to be restrained merely because there is a dispute as to
whether there had been a breach of the underlying contract. The particular feature in
Sirius that led to a different outcome was the contractual requirement that the beneficiary
should obtain written consent before drawing down funds. Stuart-Smith J then confronted
the tension in the authorities. He concluded, at [34]:
“The second [principle] is that, when considering whether or not to grant an
injunction, it is not sufficient that there is a seriously arguable case that the
beneficiary was not entitled to draw down. It must be positively established that he
was not entitled to draw down under the underlying contract – see the judgment of
Ramsey J in Permasteelisa ... If and to the extent that the subsequent decisions of
Akenhead J in Simon Carves or Edwards-Stuart J in Doosan ... suggest that a less
rigorous test is to be applied, I respectfully consider that the views of Ramsey J
should prevail as being in accordance with the substance of the decisions of higher
authority, to which I have referred. It seems to me, both on principle and authority,
that the only established exceptions to the rule that the court will not intervene
should be where there is a seriously arguable case of fraud, or it has been clearly
established that the beneficiary is precluded from making a call by the terms of the
contract.”
26. I respectfully agree with that analysis. In my judgment, a seriously arguable case of
breach of the underlying contract is not sufficient to justify injunctive relief to restrain a
beneficiary from drawing down funds on a performance bond. Indeed, that was not what
Akenhead J decided on a proper understanding of Simon Carves. Any doubt is, in my
view, resolved by Akenhead J’s express agreement with Ramsey J’s conclusion in
Permasteelisa. I therefore decline to follow Edwards-Stuart J’s conclusion that injunctive
relief may be granted against a beneficiary on the basis of a seriously arguable case of
breach of the underlying contract. In my judgment, relief can only be granted if TTSJV
can clearly establish that BapCo was precluded from making the call in this case by the
terms of the parties’ contract.
27. TTSJV sought to resist the call on the performance bond on three grounds:
27.1 First, that the liquidated damages clause amounted to a penalty which could not be
enforced by way of a call on the performance bond.
27.2 Secondly, that the call on the performance bond did not comply with the formal
requirements under the bond.
27.3 Thirdly, that the Delay Liquidated Damages claimed were not due and payable.
28. Further, by its fourth ground, TTSJV argued that in any event the retention bond was not
security against Delay Liquidated Damages.
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29. Clause 12.5 of the EPC contract permitted BapCo to use the works prior to take over and
to retain any revenue generated by operation of the plant. The contract did not, however,
contain any corresponding clause adjusting the Delay Liquidated Damages with the
consequence that BapCo could operate the plant, retain the revenue generated, and still
claim for full liquidated damages. Mr Brannigan argued that in such circumstances the
liquidated damages clause did not protect a legitimate interest but instead provided
BapCo with an unjustified windfall. Accordingly, and in reliance on Bramall & Ogden
v. Sheffield City Council (1983) 29 B.L.R. 73, Braes of Doune Wind Farm (Scotland) Ltd
v. Alfred McAlpine Business Services Ltd [2008] EWHC 426 (TCC), Doosan and
passages in both Hudson’s Building & Engineering Contracts (14th Ed.) and Keating on
Construction Contracts (12th Ed.), Mr Brannigan argued that the liquidated damages
clause was penal and that BapCo was limited to its claim in general damages.
30. While BapCo had not had time to file evidence, Mr Owen made plain that the company
did not accept the factual picture painted by the application. He pointed out that this was
not an entirely new plant but a contract for the modernisation of an existing facility such
that some production prior to completion was not surprising. Further, he pointed out that
the parties had already agreed that BapCo had an accrued entitlement to delay damages
of US$100 million as at 14 July 2024. In addition, Mr Owen relied on O’Farrell J’s
judgment in Eco World – Ballymore Embassy Gardens Co. Ltd v. Dobler UK Ltd [2021]
EWHC 2207 (TCC) and argued that each case turns on its own facts. In Bramall, he
argued, the contractual machinery simply did not work.
31. In Bramall, the contract was for the construction of 123 dwellings and other works. An
extension of time was granted and thereafter houses were taken over as they were
completed over a six-month period. The contract did not, however, make provision for
sectional completion and accordingly His Honour Judge Hawser QC held that the
contractual machinery, which provided for liquidated damages to be reduced pro rata for
each dwelling that had been completed, simply did not work. The judge held that the
stipulated liquidated damages were therefore penal in that they could substantially exceed
the actual loss sustained.
32. In Eco World, the employer under a construction contract had taken over part of the
works as completed. Again, it was argued that a liquidated damages clause that did not
contain any mechanism for reducing the level of damages to reflect early possession was
void as a penalty with the consequence that the employer could only claim general
damages. O’Farrell J cited extracts from both Keating and Hudson’s and added, at [68]:
“It is important not to elevate statements of general principle into an inflexible rule
of law. The above extracts do not state that liquidated damages provisions will
never be enforceable where sectional completion or partial possession is used
without any related reduction in the liquidated damages payable; they identify the
potential danger of failing to draft effective provisions to respond in such
circumstances. In each case, it is necessary to construe the relevant provisions of
the contract in question, adopting the established rules of contractual interpretation,
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to determine whether they give rise to a liquidated damages regime that is certain
and enforceable.”
33. O’Farrell J then considered Bramall and other cases in which the courts had struck down
a liquidated damages clause and observed, at [74], that the courts in those cases “did not
reject, as automatically fatal, the concept of one rate of liquidated damages for late
completion of the works where there is sectional completion or partial possession; rather
the express provisions in each case simply did not work because of errors in the
drafting”.
34. Of course, any consideration of this issue must involve careful consideration of the
Supreme Court’s decision in Cavendish Square Holding BV v. Makdessi [2015] UKSC
67, [2016] A.C. 1172. In Cavendish, the court made the obvious but important point that
the penalty rule is an interference with freedom of contract and added, at [35], that “in a
negotiated contract between properly advised parties of comparable bargaining power,
the strong initial presumption must be that the parties themselves are the best judges of
what is legitimate in a provision dealing with the consequences of breach”. The
applicable test, encapsulated by Lord Hodge at [255], is whether the sum stipulated in
the contract is “exorbitant or unconscionable when regard is had to the innocent party’s
interest in the performance of the contract.”
35. Further, it is necessary to keep in mind the clear commercial benefits to both parties of
an effective provision for liquidated damages as recognised by the Supreme Court in
Triple Point Technology Inc. v. PTT Public Co. Ltd [2021] UKSC 29, [2021] A.C.
1148.
36. In Eco World, O’Farrell J carefully considered the particular liquidated damages clause.
She concluded that the fact that the contract did not reduce the rate of liquidated damages
in the event of partial completion was a factor to place into the balance. Against that, she
considered that the court should be cautious about interfering with the freedom of
commercial parties who had negotiated their contract with the benefit of external lawyers
and took into account the benefits of certainty in a liquidated damages scheme. She noted
that the employer had a legitimate interest in enforcing the primary obligation to
complete the works as a whole. Further, she noted that quantification of damages in the
case of partial completion of the works would be difficult and that fixing in advance the
damages payable avoided the difficulty of calculating and proving the loss. Finally, she
considered the actual rate of delay damages in that case and concluded that it was neither
unreasonable nor disproportionate. Accordingly, she concluded that the liquidated
damages regime was not penal.
37. Here, I consider that the strong initial presumption must be against finding the carefully
negotiated provisions for liquidated damages in this contract between commercially
sophisticated parties to amount to an unenforceable penalty. The most that can be said is
that Mr Brannigan has established a potentially arguable case that the liquidated damages
might be penal for failure to reflect the partial take-over of the facility. This is not,
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however, a case like Bramall in which it has been demonstrated that something went
wrong with the drafting so that the contractual scheme is unworkable. Analysis of Mr
Brannigan’s argument will depend on careful consideration of all of the factors, including
the importance of respecting party autonomy in their carefully negotiated contract; the
very real benefits of certainty in a scheme for liquidated damages; the fact that this is not
a contract for the construction of an entirely new facility but that the works comprise a
modernisation scheme; BapCo’s legitimate interest in completion of the whole of the
works; the apparent concession that at least US$100 million is payable by way of delay
liquidated damages; and a fact-sensitive analysis as to the proportionality of the
liquidated damages in this case. Such assessment cannot of course be finally made on an
urgent interim injunction application heard at very short notice with limited evidence
served only on one side.
38. In my judgment, TTSJV has not clearly established that the liquidated damages clause is
an unenforceable penalty clause and accordingly BapCo will not be restrained on that
basis from pursuing its demand on the bond. Lest, however, I am wrong as to the
applicable test, I am not persuaded that Mr Brannigan has achieved his own ambition of
seeking to establish a strongly arguable case on the point.
39. Mr Brannigan argued that the demand under the performance bond was not compliant with
the terms of the guarantee. The argument was put on the basis that clause 11 of the guarantee
expressly incorporated the Uniform Rules for Demand Guarantees (2010 revision) and that,
in breach of article 15(a) of the uniform rules, the demand was not supported by a statement
by BapCo indicating in what respect TTSJV was in breach of its obligations.
40. The guarantee required any demand to be substantially in the form of the attached exhibit
1, the material parts of which provided:
“THE UNDERSIGNED, AN AUTHORISED REPRESENTATIVE OF THE
BAHRAIN PETROLEUM COMPANY (B.S.C.) (THE ‘BENEFICIARY’), AS
BENEFICIARY UNDER LETTER OF GUARANTEE NO. (INSERT NUMBER)
DATED (INSERT DATE) (THE ‘PERFORMANCE SECURITY’) ISSUED BY
(INSERT NAME OF BANK) (THE ‘ISSUING BANK’) IN FAVOUR OF THE
BENEFICIARY, DOES HEREBY:1. REQUEST PAYMENT UNDER THE PERFORMANCE SECURITY IN
THE AMOUNT OF US DOLLARS (.) BY WIRE TRANSFER IN
IMMEDIATELY AVAILABLE FUNDS TO (INSERT BANK), ABA NO.
(INSERT), GLA NO. (INSERT), FOR CREDIT TO THE (DESCRIBE
ACCOUNT), ACCOUNT NO. (INSERT), REF: (INSERT); AND2. CERTIFY THAT THE BENEFICIARY IS ENTITLED TO PAYMENT OF
SUCH AMOUNT PURSUANT TO THE (.) AGREEMENT.”
41. The demand made by BapCo used the form of words at exhibit 1 and completed the space
denoted by the “(.)” in paragraph 2 of the prescribed form by identifying the EPC
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contract.
42. In his submissions, Mr Brannigan acknowledged that, on its face, the pro forma demand
did not expressly require BapCo to identify the alleged breaches of obligation that
triggered the entitlement to make a demand on the performance bond. Further, he
acknowledged that clause 11 of the guarantee provided that, in the event of conflict, the
terms of the guarantee would prevail over the uniform rules. He argued that the guarantee
could, however, be construed consistently with the uniform rules by construing the “(.)”
in paragraph 2 of the prescribed form as a placeholder in which BapCo should enter the
details of its claim. He argued that if the placeholder were merely intended to provide
space in which to identify the EPC contract, then it served no purpose since the defined
term “Agreement” already served that purpose.
43. I do not accept Mr Brannigan’s argument:
43.1 First, the placeholder in paragraph 2 was the only place in the prescribed form in
which BapCo could identify the underlying EPC contract. The Agreement was a
defined term in the letter of guarantee but not in the pro forma demand and
accordingly it was necessary for BapCo to insert these details, just as it was
necessary to insert details of, among other matters, the letter of guarantee and the
issuing bank. The natural and ordinary meaning of the form was that BapCo should
insert details of the EPC contract in the space provided and not of its claims in
respect of breach of such contract.
43.2 There is, in any event, no need to construe the placeholder as requiring BapCo to
insert the details of its claim since there is nothing in article 15(a) of the uniform
rules which requires such details to be given in the body of the demand. Article
15(a) provides:
“A demand under the guarantee shall be supported by such other documents
as the guarantee specifies, and in any event by a statement, by the beneficiary,
indicating in what respect the applicant is in breach of its obligations under
the underlying relationship. This statement may be in the demand or in a
separate signed document accompanying or identifying the demand.”
44. Mr Owen told me that although it had not been included in the applicants’ evidence, the
demand was supported by a statement setting out the details of BapCo’s claims as required
by article 15(a). Mr Brannigan did not dispute that assertion but explained that there had
been no deliberate failure to disclose the supporting document. Quite irrespective of the
disclosure point, Mr Brannigan’s acceptance for the purpose of the hearing that there had
been a supporting statement that had not been put before the court was fatal to his argument
that urgent interim relief should be given for alleged breach of the uniform rules.
45. Further, Mr Brannigan argued that on the proper construction of clauses 8.3, 8.6 and 24.1
of the EPC contract and clause 4 of the settlement agreement, delay liquidated damages
were only due and payable to the extent that the failure to achieve Provisional Acceptance
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by the Further Revised Provisional Acceptance Date was not excused by Relevant Events
for which TTSJV was entitled to an extension of time.
46. Certainly clause 8.3 of the EPC contract entitled the contractor to an extension of time if
and to the extent that delay was a direct result of certain matters beyond the contractor’s
control. Clause 8.3(d) made clear that the contractor was not entitled to any extension in the
event of there being concurrent delays and at least one of those delays would not give rise
to an entitlement to an extension.
47. Clause 24.1 set out the procedure by which the contractor could make a claim for an
extension of time. The claim would be determined by BapCo in accordance with the claims
determination procedure at clause 3.5. Such procedure required BapCo to consult the
contractor and endeavour to reach agreement. Failing agreement, BapCo was required to
make a fair determination of the claim in accordance with the contract having due regard to
all relevant circumstances. The contractor could then give notice of its dissatisfaction with
the determination within a period of 14 days. Provided such notice was given, the dispute
could then be referred for determination by arbitration pursuant to clause 25.
48. Mr Brannigan acknowledged that there was no clause that provided that unless or until
the extension of time claim was resolved, liquidated damages would not be due and
owing. In this context, it seems to me that I should have been referred to clause 3.5(c)
which provides:
“Each Party shall give effect to each agreement or determination even where a
notice of dissatisfaction is served pursuant to Clause 3.5(d) (Determinations), and
notwithstanding that a dispute has been referred to be determined (and is pending
determination) under Clause 25 (Arbitration and Dispute Resolution).”
49. While I have not had the advantage of any adversarial argument on the point, this
provision is important since it appears to dispose entirely of ground 3 in providing that
the parties were required to give effect to BapCo’s rejection of the extension of time
claim notwithstanding the contractor’s challenge to that determination.
50. In any event, Mr Brannigan’s argument came to this. TTSJV asserts that BapCo has
wrongly rejected its extension of time claim. The claims were finally rejected in a
determination made on 3 May 2026 which enclosed a 34-page report which advanced
seven specific grounds for rejection. There has been no attempt to engage with the detail
of that determination and, when I asked Mr Brannigan how on the evidence and argument
before the court I could properly conclude that it was strongly arguable (let alone that it
had been clearly established) that the extension of time claim had been wrongly rejected,
he disarmingly responded that that was why this was his third ground.
51. I did not call on Mr Owen to address this ground. Even if Mr Brannigan had been right as
to the applicable test, TTSJV has failed to make out a strongly arguable case. Certainly it
has not clearly established that delay liquidated damages are not due and payable.
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52. Mr Brannigan initially argued that on its terms the retention bond was not security against
the payment of Delay Liquidated Damages. Mr Owen quickly dismantled this
argument:
52.1 Paragraph 11(d) of Annex 12 to the EPC contract provides:
“The Retention Bond may be called on, and sums received applied by the
Owner against, in relation to any of the circumstances set out in paragraphs
18.a.i, 18.a.ii and 18.b.i to 18.b.vii (inclusive) (Owner’s Right to Set-off,
Deduct or Withhold) below.”
52.2 Paragraph 18.a.ii provides:
“Without limiting or prejudicing any other rights or remedies of the Owner,
the Owner shall be entitled to set-off or deduct from any payment due to the
Contractor under the Contract: ...
ii. any claim to money that the Owner may have against the Contractor
whether for damages (including liquidated damages) or otherwise,
subject to providing the Contractor [with] no less than three (3) days’ prior
written notice of its intention to set-off or deduct a particular amount and
provided that the Contractor has failed to pay such amount before the date on
which the set-off or deduction is proposed to be made.”
53. There was, therefore, no merit in TTSJV’s argument that the retention bond was not
given as security against Delay Liquidated Damages and the ground was rightly
abandoned in Mr Brannigan’s submissions in reply.
54. For these reasons I refused injunctive relief in this case.