High Court clarifies formality requirements for calling on on-demand bonds

Lukoil Mid-East Ltd v Barclays Bank plc [2016] BLR 162, [2016] EWHC 166 (TCC), 27 January 2016

Lukoil applied for summary judgment against the bank in order to enforce an on-demand guarantee. The bank, however, sought to resist Lukoil’s demand on a technicality, by arguing that the demand was not valid because the condition that “no amendment has been made to the contract concluded between [Lukoil] and [the company guaranteed by the bank] impacting the timely performance of the works under the contract” had not been mentioned in the demand. The main point of departure between the parties was the application of IE Contractors Ltd v Lloyds Bank Plc [1990] 2 Lloyd’s Rep 496, which was the last word on the formal requirements of a demand before this case.