Once due under an on-demand bond, always due - .PDF file.
Wragge & Co last reported on Wuhan Guoyu Logistics Group Co Ltd v Emporiki Bank of Greece SA in April 2013. The dispute related to a shipbuilding contract where the bank guaranteed the payment obligations of its customer, the buyer, to the claimant seller under the contract. There was a dispute as to whether a payment instalment was due and the claimant called for payment under the payment guarantee from the bank.
The Court of Appeal had determined that the payment guarantee was a performance bond and that payment was to be made under it on demand, whether or not there was an underlying dispute as to payment between the contracting parties.
In the latest foray before the Court of Appeal, the issue was whether when the bank released money under the bond to the claimant, the claimant held it on trust for the bank, or the bank’s customer, as argued by the bank…
Click on the link below to read the rest of the Wragge & Co briefing.