[2011] EWHC 3103 (Comm)

This is another in the line of cases deciding whether a commercial instrument is a “demand” or a “see to it” guarantee; but it also involved a careful consideration of many of the “predictable” defences raised on a claim under a guarantee, namely, variation of the underlying contract, non-disclosure of material facts, lack of signature (i.e. Statute of Frauds), and also defences of rectification and estoppel (by convention, acquiescence and representation) and a restitutionary counterclaim.

The claims were brought by the buyers of three new-build bitumen tankers under Refund Guarantees issued by Korean financial institutions in respect of three shipbuilding projects which overran and were cancelled. The defendant financial institutions advanced a whole range of defences, all of which failed.

The conclusions reached by the trial judge, Blair J, included the following:

• The material variation/forebearance principles applicable to “see to it” guarantees do not apply to “demand” guarantees;
• There is nothing inherent in the relationship between the issuer and beneficiary of a “demand” guarantee that places a duty of disclosure on the former to the latter;
• If the name of the issuer of a “demand” guarantee sent through the SWIFT messaging system appears in the header to the message, it is a sufficient signature for the purposes of the Statute of Frauds.

Stephen Hofmeyr QC appeared for the Claimant.