Page 25 - August-2020-Issue

ARTICLE

seven days after the end of the
lockdown. Five of the eight per-
formance bonds that were the
subject of a call in Halliburton v
Vedanta will expire on 30 June
2020. While there is still some gap
between the end of the period of
injunction and the expiration of
some of the bonds, what would
happen were the lockdown to
be extended by a period that
ended after the date of expiry of
the bonds? Would the balance of
convenience at that stage shift in
favour of the beneficiary being
allowed to proceed with the call
to protect its interests because not So, we could encounter a situ- made if there was a risk that the
allowing a call would cause irrep- ation, either in Halliburton v beneficiary would not be good
arable damage to the beneficiary Vedanta or in future lockdown- for the money if it were required
instead? related injunction cases, where to repay in due course. This
In practice, a threat of a call be- the “special equities” may change risk does not seem to have
cause of an imminent expiry of depending on the interaction been argued to exist in Halliburton
a bond is often met with an of- of the period of lockdown and v Vedanta.
fer by the party procuring the the expiry of the bond. Again, The ad-interim injunction issued
bond to extend the validity of the this is an area expressly dealt by the Court will stay in force
bond. This is a sensible approach with by Singapore’s COVID-19 until the next hearing. It will be
and causes the least disruption (Temporary Measures) Act 2020 interesting to see how the Court
and cost to both the procurer of that provides that the period of deals with this issue on fuller
the bond and the beneficiary. validity of any bond that would submissions at that stage.
However, this approach assumes otherwise expire during the pe-
that the procurer is able to obtain riod that the Act prohibits a call Dealing with the impact
an extension of the bond. from being made, will be auto- of COVID-19
In the case of Halliburton, after it matically extended (upon ap- COVID-19 and the resultant im-
filed the injunction application, plication by the procurer) to a pact on contractual performance
Vedanta terminated the contract. period ending seven days after is a hot topic across legal circles
In situations where the contrac- the prohibition is lifted (section across the world. Issues affecting
tor’s contract has been terminat- 6 of the Act). Such ‘deeming’ contractors and employers who
ed, it is often difficult for the con- provision does away with the
tractor to obtain an extension of uncertainty as to whether the are dealing with COVID-19 re-
bonding facilities. We have seen bank providing the bond would lated disruptions under English
this in the English case of Liberty agree to an extension, and on and Hong Kong law have been
Mercian Ltd v Cuddy Civil Engi- what terms. the subject of an excellent article
neering Ltd and another (No 2) Of course, it would be open by two of my fellow members of
[2014] EWHC 3584 (TCC) where for a court facing a call on the Chambers Andrew Goddard QC
the contractor’s inability to obtain bond whose expiration is immi- and Mischa Balen.
a performance bond because the nent to order that the bank hon- The injunction application in
underlying contract had been ter- our the call but hold the funds Halliburton was heard by the
minated led the court to have to with itself pending final resolu- New Delhi court by video confer-
order the contractor to pay mon- ence, something that is becoming
ey into the court in lieu of the per- tion of the dispute. But that sort increasingly common during this
formance bond. of order would probably only be lockdown period.

Kaleidoscope May, 2020 25