Source: All England Reporter
Publisher Citation: [2012] All ER (D) 142 (Jun)
Neutral Citation: [2012] EWHC 1715 (Comm)
Court: Queen's Bench Division, Commercial Court
Judge:

Christopher Clarke J
Representation Jonathan Hirst QC and Sara Cockerill QC (instructed by Reed Smith LLP) for the sellers. 
  Sean O'Sullivan and James Hart (instructed by Ince & Co LLP) for the bank.
Judgment Dates: 22 June 2012

Catchwords

Guarantee - Construction - Refund guarantees - Guarantee securing refund of advance payment under shipbuilding contract - Claimants jointly operating shipyard in China - Claimants entering into two shipbuilding contracts with company for construction of two bulk carriers - Contract novated to two other companies (buyers) - Defendant bank providing finance to buyers for purchase of vessel under facility agreement - Buyers assigning to bank refund guarantee and all moneys and claims for moneys due to buyers under shipbuildinig contract and refund guarantee - Bank purporting to issue guarantee (payment guarantee) in respect of second instalment of price of the vessel under shipbuilding contract - Claimants making demand for payment under payment guarantee - Claimant applying to court for summary judgment for principal and interest - Whether payment guarantee being 'guarantee' or 'demand bond' - Whether summary judgment to be granted.

The Case

Guarantee Construction. The Commercial Court of the Queen's Bench Division held, in dismissing the claimants' application for summary judgment, that a payment guarantee in respect of a contract for the construction of two bulk carriers, was, in law, a guarantee and not, as contended by the claimants, a demand bond.

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