In
Under a construction contract, the Principal may be entitled to call on a bank guarantee, even while the parties are involved in arbitration.
The Court is unlikely to intervene on the "life blood of commerce" and restrict a party from calling on bank guarantees, unless presented with a strong or serious prima facie case.
Background:
On
Decision:
The Court noted, if asked to step-in on an interim basis (such as prohibit one party from calling on the guarantee), that this would be done "in accordance with [the Court's] own procedure", albeit "in consideration of the special features of international arbitration."
Rees J held that, although the existence of arbitration did not automatically restrict the Court from hearing the application, Daewoo would need to demonstrate a strong or serious prima facie case to validate the Court's intervention.
In coming to his decision, Rees J canvassed the existing law on interlocutory injunctions, bank guarantees, and the interplay with the International Arbitration Act 1974 (Cth).
Key Takeaways:
The case of Daewoo v
The judgment can be accessed here: https://www.caselaw.nsw.gov.au/decision/182cd00a1f2656b3d348bc08
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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