By James Davies Naomi Bell and Mark Roach
|Published 28 September 2026
In TTSJV WLL and others v Bapco Refining BSC [2026] EWHC 2047 (TCC), the TCC confirmed that, absent fraud, a party seeking to restrain a call on an on-demand performance bond must clearly establish that the underlying contract precludes the demand. A a seriously or strongly arguable contractual dispute is not sufficient.
The dispute arose out of a US $4.2 billion Engineering, Procurement, and Construction Contract (the "EPC Contract") between Bapco Refining BSC ("BapCo") and a consortium of companies operating as TTSJV for the modernisation of BapCo's oil refinery in Bahrain. The contract was governed by English law and provided for LCIA arbitration in London.
Following delays to the project, BapCo contended that TTSJV was liable for approximately US $484.4 million in liquidated damages. TTSJV disputed this, maintaining that it was entitled to substantial extensions of time following a fatal explosion at BapCo's refinery on 2 May 2025 and the resulting site restrictions, inspections and remedial works. After rejecting TTSJV's extension of time claims, BapCo made a demand under an on-demand performance guarantee issued by HSBC Bank Middle East Ltd.
TTSJV sought an urgent injunction restraining BapCo from pursuing the demand pending resolution of the underlying dispute through arbitration.
The application was brought under section 44 of the Arbitration Act 1996, with TTSJV arguing that funds might be released under the performance guarantee before an emergency arbitrator could be appointed and grant effective relief. The court accepted that the application was urgent and that, notwithstanding the availability of emergency arbitration, there was a very real prospect that funds could be released before an emergency arbitrator was appointed and able to act effectively.
The central issue was the test for restraining a demand under an on-demand performance bond.
TTSJV argued that it was sufficient to establish a strongly arguable case that, under the terms of the underlying EPC Contract, BapCo was precluded from making a demand under the performance guarantee. In support, it relied on authorities including Simon Carves Ltd v Ensus UK Ltd and Doosan Babcock Ltd v Comercializadora de Equipos y Materiales Mabe Limitada. BapCo disagreed and argued that it was not enough to show a seriously arguable case. Rather, the applicant had to positively establish that the beneficiary was precluded from making the call under the underlying contract.
The judge accepted that submission, noting that TTSJV had relied upon an inaccurate quotation from Simon Carves Ltd v Ensus UK Ltd [2011] EWHC 657 (TCC) in support of its argument that a "strongly arguable case" was sufficient. After reviewing the authorities, including Sirius International Insurance Co v FAI General Insurance Ltd, Permasteelisa Japan KK v Bouyguesstroi and MW High Tech Projects UK Ltd v Biffa Waste Services Ltd, the court held that the applicant must establish that the beneficiary is precluded from making the call by the terms of the contract. Pepperall J expressly agreed with Stuart-Smith J's analysis in MW High Tech Projects UK Ltd v Biffa Waste Services Ltd [2015] EWHC 949 (TCC), and held that, properly understood, Simon Carves did not lower the threshold for injunctive relief. While a demand may be restrained where the underlying contract clearly prohibits it, the applicant must clearly demonstrate that prohibition exists. The court declined to follow comments in Doosan Babcock to the extent that it suggested a less rigorous test. The judgment also reaffirmed that there are only two recognised exceptions to the general principle that on-demand bonds should be honoured:
Applying those principles, the court found that TTSJV had not established that BapCo was precluded from making the call and dismissed the application.
The judgment reinforces the distinction between an arguable contractual dispute and a clearly established contractual restriction on a beneficiary's entitlement to demand payment under the security. Only the latter is capable of justifying injunctive relief.
The decision highlights the difficulty of restraining a bond call and the importance of identifying clear contractual language prohibiting the demand. An underlying contractual dispute, however substantial, will not ordinarily stop a call on the bond.
The decision also demonstrates the importance of careful drafting. Parties negotiating EPC contracts and associated security packages should consider whether specific contractual restrictions on bond calls are required and, if so, ensure that such restrictions are clearly and expressly stated.
The decision reflects the courts' continuing reluctance to interfere with on-demand security. In practice, parties will remain subject to a "pay now, argue later" regime absent fraud or a clear contractual restriction on the beneficiary's right to demand payment.
TTSJV v BapCo confirms that a seriously arguable contractual dispute is insufficient to restrain a bond call. Unless a seriously arguable case of fraud can be demonstrated, an applicant must clearly establish that the underlying contract prevents the making of a demand.
The judgment confirms that Simon Carves should not be read as lowering the threshold for injunctive relief, in that case the contract itself clearly removed any entitlement to call on the bond.
The decision serves as a reminder that on-demand performance bonds remain robust security instruments and that the courts will interfere with bond calls only in narrowly defined circumstances.
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