Permasteelisa Japan KK v Bouyguesstroi & Anor [2007] EWHC 3508 (TCC) (07 November 2007)

Permasteelisa Japan KK v Bouyguesstroi & Anor [2007] EWHC 3508 (TCC) (07 November 2007)

The court will not grant an interim injunction restraining a call on a performance bond or the proceeds thereof unless there is a seriously arguable case of fraud or a clear risk of dissipation. Mere existence of a seriously arguable case on breach of contractual preconditions is insufficient to justify intervention, as this would undermine the commercial effectiveness of performance guarantees. The claimant failed to establish fraud or risk of dissipation, and the dispute should be resolved by arbitration.

Citation
[2007] EWHC 3508 (TCC)
Parties
Claimant: Permasteelisa Japan KK; First Defendant: Bouyguesstroi; Second Defendant: Banca Intesa SpA
Jurisdiction
England and Wales
Judgment Date
07 November 2007
Procedural Posture
Interim Injunction Application in Arbitration Context / Application to Continue Interim Injunction Pending Arbitration
Outcome
Application dismissed; interim injunctions discharged.
Legal Topics
Interim Injunctions, Performance Bonds, Arbitration Act 1996 S.44, Freezing Injunctions, Autonomy Principle of Letters of Credit
Arbitration Construction Law Commercial Law Interim Injunctions Performance Bonds Arbitration Act 1996 S.44 Freezing Injunctions Autonomy Principle of Letters of Credit

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Parties

Permasteelisa Japan KK

Claimant

Bouyguesstroi

First Defendant

Banca Intesa SpA

Second Defendant

Procedural Posture

Interim Injunction Application in Arbitration Context / Application to Continue Interim Injunction Pending Arbitration

Legal Issues

  1. 1 Whether the claimant is entitled to an interim injunction restraining the first defendant from making a call on a performance bond and/or dealing with proceeds pending arbitration
  2. 2 Whether the contractual preconditions for a call on the bond were satisfied
  3. 3 Whether the court should intervene in the absence of fraud or risk of dissipation

Ratio Decidendi

The court will not grant an interim injunction restraining a call on a performance bond or the proceeds thereof unless there is a seriously arguable case of fraud or a clear risk of dissipation. Mere existence of a seriously arguable case on breach of contractual preconditions is insufficient to justify intervention, as this would undermine the commercial effectiveness of performance guarantees. The claimant failed to establish fraud or risk of dissipation, and the dispute should be resolved by arbitration.

Court Disposition

Application dismissed; interim injunctions discharged.

Orders

  • Interim injunctions against Bouygues are discharged.
  • Bouygues' call on the bond may proceed unaffected by any order of this court.