In TTSJV W.L.L and others v BapCo Refining B.S.C (TTSJV),[1] the English High Court dismissed an application for an injunction against a bond call. Applications to restrain bond calls are difficult, given the high threshold. London has reaffirmed the position that a call on an ‘on-demand’ bond can only be restrained in cases of fraud or when the applicant can clearly establish that the beneficiary is precluded from making the call by terms of the parties’ underlying contract. A seriously arguable case is not a ground for restraining a call.
Context
An EPC contract was granted by BapCo (the Respondent) to a consortium (the Claimants) to upgrade BapCo’s existing oil refinery in Bahrain. A dispute arose as to whether the Claimants failed to achieve completion, entitling the Respondent to liquidated damages for delay or whether Claimants were entitled to an EOT. The Respondent rejected the EOT and demanded payment of liquidated damages for delay. The Claimants indicated their intention to refer the dispute to arbitration.[2]
On 21 May 2026, the Respondent made a call on the on-demand bond. The Claimant asked the LCIA to appoint an emergency arbitrator, and made an application to the High Court for injunctive relief the same day under section 44 of the Arbitration Act 1996. The Hearing in the High Court took place on 22 May 2026.
The High Court’s Thinking
In refusing to grant the injunctive relief, Pepperall J restated the law on the grounds for restraining a bond call: namely, injunctive relief can only be granted in the cases of fraud, or a term clearly and expressly preventing such a demand.[3] Specifically, Pepperall J rejected the argument that “a seriously arguable case of breach of the underlying contract” could be sufficient to restrain a bond call.[4] Such doubt in the law had arisen from Doosan Babcock Ltd v Commercializadora de Equipos y Materiales Mabe Limitada,[5] in which Edwards-Stuart J granted an injunction on the grounds that “the Claimant has a realistic prospect of establishing” breach of contract.[6] This was said to be an extension of the law supported by the judgement of Simon Carves Ltd v Ensus UK Ltd.[7]
As Pepperall J explains, such an extension is not supported by Simon Carves Ltd v Ensus UK Ltd, and was also rejected in MW High Tech Projects v Biffa Waste Services Ltd.[8] Specifically, the scope of the second exception applies only where it can be “positively established that [one] was not entitled to draw down under the underlying contract”.[9] It does not extend – as applicant’s counsel in the present case contended – to cases where this is seriously arguable, or where the entitlement to the alleged breach of the underlying contract, giving rise to the bond call, is seriously arguable.
Our Thoughts
Put shortly, TTSJV reaffirms the position in London that a call on an on-demand bond can only be restrained on limited grounds of fraud, or a term clearly and expressly preventing such a demand. A seriously arguable case is not a ground for restraining such a call. Restraining a call is difficult.
Unconscionability does not feature in English law. Unconscionability is often used in Singapore law and Malaysian law to seek to restrain calls on on-demand bonds where a demand is argued to be made in bad faith or involves abusive, unfair or dishonest conduct. The case law is mixed. Shanghai Chong Kee Furniture & Construction Pte Ltd v Church of St Teresa[10] shows that Singapore courts will be slow to restrain calls on on-demand bonds on the grounds of unconscionability – even where a bond call is based on a contract administrator’s mistaken (but honest) overcalculation of delay liquidated damages. Malaysia’s jurisprudence is more receptive to unconscionability arguments as seen in KNM Process Systems Sdn Bhd v. Lukoil Uzbekistan Operating Company LLC.[11] French law treats autonomous guarantees (garanties autonomes) under Article 2321 of the French Civil Code as strictly independent payment instruments, and French courts intervene only in exceptional, narrowly defined circumstances. The two recognised grounds — fraud (la fraude) and manifest abuse (l’abus manifeste) — are conceptually similar to the Singapore and Malaysia doctrines of fraud and unconscionability, but the French thresholds are more stringent. Exceptional circumstances are needed to restrain calls.
[1] [2026] EWHC 2047 (TCC).
[2] The contract was governed by English law, with the arbitration seated in London and under the LCIA rules
[3] Ibid, at [21].
[4] Ibid, at [26].
[5] [2013] EWHC 3201 (TCC).
[6] Ibid, at [26].
[7] [2011] EWHC 657 (TCC).
[8] [2015] EWHC 949 (TCC).
[9] Ibid, at [34]. Quoted with approval at TTSJV (n. 1), at [25].
[10] [2024] SGHC 5.
[11] [2020] 1 LNS 479.
