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England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Permasteelisa Japan KK v Bouyguesstroi & Anor  EWHC 3508 (TCC) (07 November 2007)
Cite as:  ArbLR 48,  EWHC 3508 (TCC)
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
London WC2A 2LL
B e f o r e :
| PERMASTEELISA JAPAN KK
|- and -
(2) BANCA INTESA SPA
PO Box 1336 Kingston-Upon-Thames Surrey KT1 1QT
Tel No: 020 8974 7300 Fax No: 020 8974 7301
(Official Shorthand Writers to the Court)
Crown Copyright ©
MR JUSTICE RAMSEY:
(1) the Subcontract, which required the claimant to supply and deliver curtain wall material and equipment to the Sakhalin site;
(2) the Secondment Agreement, which required the claimant to provide supervision staff for the installation of the curtain walls; and
(3) the Side Letter Agreement, which made the claimant responsible for the supply, delivery, installation and commissioning of the curtain wall work
"In consideration of the signature by Bouygues with Permasteelisa Japan KK (hereinafter referred to as the subcontractor) of the subcontract dated 19 February 2004 (hereinafter referred to as the Subcontract) for the curtain wall and associated works (hereinafter referred to as the subcontracted works) within the frame of the Exxon Neftgas Ltd permanent office facilities project in Sakhalin, Russian Federation, we, Banka Intesa SpA, acting through its Tokyo branch, hereby guarantee unconditionally and irrevocably undertake to pay to the contractor on its first demand, despite any objection of the subcontractor, such sum or sums as the contractor may claim to us, provided such sum or sums shall not in aggregate exceed the amount of this guarantee as defined hereunder. This guarantee is issued for an initial amount of US$ 463,666 (herein after referred to as the amount of this guarantee). The amount of this guarantee shall be adjusted at the request of the contractor in the event of any increase of the subcontract price so that the amount of this guarantee shall always be equal to 10 per cent of the subcontract price. The amount of this guarantee shall, however, be reduced to an amount equal to 5 per cent of the subcontract price on receipt by us of a turnover notice of the subcontract works issued and signed by the contractor for the whole subcontracted works. This guarantee shall be construed and governed in accordance with the laws of the United Kingdom."
"According to the provisions of the performance guarantee, we hereby request you to pay us immediately the full amount guaranteed in such performance guarantee, i.e. US$ 464,666, on the following bank account opened by Bouygues at ZAO Calyon Rusbank, Moscow branch, Bolchoi Zlatooustinsky Per 1/6, Moscow, Russian Federation."
"An interim measures award under Article 26 of the UNCITRAL Rules (a) restraining Bouygues from making any further demand to the Bank pursuant to the performance guarantee dated 13 June 2004 and issued by the second respondent in favour of the first respondent …; (b) directing Bouygues to transfer immediately any sums received from the Bank pursuant to the Performance Guarantee into a bank account in London in the joint names of Bouygues and the claimant and held subject to the joint order of Bouygues and the claimant and/or the direction of the arbitral tribunal; (c) directing Bouygues to issue immediately the turnover notice of the subcontract works in accordance with clause 15.2.1 of the Subcontract and to serve it immediately on Banka Intesa, Tokyo branch."
"We ask you to promptly proceed with payment of your debt and no later than within 15 days [about 31 August 2007]."
"We reiterate our request for you to repay an amount corresponding to the current debt [of the claimant] in order to balance the accounts and to restore such confidence."
"Further to our formal request for payment under our letter dated 16 August 2007 which gave you a 15-day period to effect payment of the monies owed by you under your present account, we hereby formally not only record your failure to effect such payment but your rejection of such payment (your fax dated 21 August 2007). With reference to your Subcontract and more particularly to Article 18.4.2 and 18.4.3 of the latter, to the Side Letter Agreement dated 19 February 2004 and to your failure to comply with our demand to make good the current financial situation, please be informed that we have asked for payment of your Performance Guarantee issued by Banka Intesa, Tokyo branch, dated 13 June 2004 to its full amount of US$ 463,666."
Was there a default?
"The contractor shall have the right to set off any loss, damage, liability or claim which the contractor may have against the subcontractor against any payment."
"In case the subcontractor fails to comply with one of its contractual duties and/or obligations and if such default exceeds a period of ten (10) days after the contractor gives the subcontractor formal written notice of remedying such a default, or in case the subcontractor would go bankrupt or go into liquidation the subcontractor shall be entitled to the following measures … (iv) call all or part of bank guarantees."
The Overall Position
"If the case is one of urgency, the court may, on the application of a party or proposed party to the arbitral proceedings, make such orders as it thinks necessary for the purpose of preserving evidence or assets."
"(5) In any case the court shall act only if or to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively. (6) If the court so orders, an order made by it under this section shall cease to have effect in whole or in part on the order of the tribunal or of any such arbitral or other institution or person having power to act in relation to the subject-matter of the order."