England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		27 January 2016

Mr Justice Stuart-Smith :

Introduction

1. This is an application for summary judgment made by the Claimant ["Lukoil"] against the Defendant ["Barclays"] in the sum of US$7,115,034 plus interest, pursuant to a call it made on an on demand guarantee issued by the Defendant ["Barclays"] by letter dated 26 October 2015. By a counter-application Barclays applies for summary judgment against Lukoil on the basis that Lukoil's demand was defective and that no obligation to make payment under the bond has arisen.
2. The applications raise a short point of construction. The material facts are not in dispute.

The Factual Background

3. Lukoil is an oil and gas company registered in Cyprus. It is the Operator of the West Qurna (Phase 2) oil field in South East Iraq. Barclays is a bank registered in England. Its business includes issuing (to contractual counterparties of its clients) on demand bank guarantees upon the provision by its clients of counter-indemnities (or other securities) and the payment of its charges.
4. In 2011 Lukoil engaged Baker Hughes Asia Pacific Limited (a company registered in the Cayman Islands) ["BH"] under a suitably detailed written contract known as Contract No. CY-11-8015-0060 to drill and complete 23 production wells in the Mishrif formation in the West Qurna (Phase 2) oil field on a turnkey basis (the "Contract"). The estimated Contract Price was US$142,300,680.
5. The Contract included the following relevant provisions:

i) Article 6.18 provided:

"Bank Guarantee

Within 10 days from the Effective Date of this Contract [BH] shall deliver to [Lukoil], as security for [BH's] performance of its obligations under this Contract and its insolvency, an irrevocable, unconditional, on demand bank guarantee issued by an international bank rated not lower than B+ by international ratings agencies Fitch, Moodys or Standard and Poors and being in the form acceptable to [Lukoil], for 5% (five percent) of the estimated Contract Price… Such bank guarantee shall provide that, and [BH] shall ensure that, the bank guarantee remains valid until the 90th (ninetieth) day following handover, in accordance with Article 6.17, of the last well to be drilled and Completed under this Contract or earlier termination of this Contract. [BH] shall bear all costs and charges related to the issue and maintenance of the said bank guarantee."

ii) Article 22 provided for Variations and for extensions of time to be given where reasonable and appropriate:

a) Article 22.1

"The scheduled Completion Dates established pursuant to this Contract and Key Dates shall be subject to adjustment only in accordance with the provisions of this Article 22 (Variations). Any Variation shall be governed by all the provisions of the Contract.

Any Variation is effective only when it is made in writing and agreed or determined in accordance with this Article 22."

b) Article 22.2

"At any time during the term of validity of the Contract, the Company shall be entitled to initiate the introduction of changes in the Work, including:

(a) changes to any Detailed Drilling Program once it has been approved by the Company in accordance with Article 5.1.2;

(b) omission of any Work, cancellation of the supply of any equipment;

(c) change in the nature, quality or kind of any Work or equipment to be supplied as part of the Work;

(d) execution of Additional Work or supply of additional equipment.

For the purposes of the Contract the matters described in this Article 22.2, including items (a) to (d) inclusive, shall be referred to as a "Variation". Any changes made through Variation shall be in a written form and shall be signed by the authorized representatives of the Parties."

c) Article 22.11

"If the Contractor considers himself to be entitled to any extension of time under the Contract, the Contractor shall give notice to the Company, describing the event or circumstance giving rise to the claim. The notice shall be given as soon as practicable.

Subject to the foregoing paragraphs of this Article 22.11, the Contractor shall be entitled to an extension of the Key Dates as shall be reasonable in all the circumstances if and to the extent that completion of Work is or will be delayed by any of the following causes:

(a) a Variation (unless an adjustment to the Completion Date or Key Date has already been agreed under Articles 22.1 to 22.10);

(b) any delay, impediment or prevention caused by or attributable to the Company or the Company's personnel (including as a result of breach of this Contract); or

(c) force majeure (as such term is defined in Article 19),

in each case whether occurring before or after the relevant Completion Date or relevant Key Date has expired, but, in any event, excluding delay which is due to any breach, neglect, or default of the Contractor or any person for whom the Contractor is responsible in accordance with the Contract."

iii) Article 23 provided for BH to pay Lukoil liquidated damages for BH's delay in achieving any of the Key Milestones by the Key Dates set out in Appendix No. 12.

iv) Article 24.7 was an entire agreement clause, which included the provision that: "No changes or amendments to this Contract shall be binding on either Party, unless executed in written form, duly signed and sealed by both Parties, unless otherwise set forth herein." As we have seen already, Variations did not require to be sealed, having their own detailed contractual machinery;

v) Appendix No. 12 to the Contract, #1.10, provided for Key Milestones and Key Dates for achieving them, including "End of Completion of the last well (#23)" on 1 January 2013.

6. On or about 2 November 2011 BH delivered to Lukoil an irrevocable, unconditional, on demand bank guarantee issued by Barclays dated 2 November 2011 (the "Bank Guarantee"). It provided (with paragraph numbering added):

"OUR GUARANTEE REFERENCE: MRGI55024596

To: [Lukoil]

[1.] Whereas [BH] … has undertaken obligations under Contract No. CY-11-8015-0600. For Drilling and Completion of Production Wells Mishrif Formation in West Qurna (Phase 2) (hereinafter referred to as "the Contract"), and whereas the mentioned Contract states that [BH] shall provide a bank guarantee for the amount defined therein to secure the fulfilment of [BH's] obligations under the Contract, and whereas we Barclays … agreed to provide [BH] with such a bank guarantee, we hereby unconditionally and irrevocably declare that we are the Guarantor and on behalf of [BH] we bear responsibility and obligations to you for the total amount of USD 7,115,034.00 … and this amount shall be paid in the same currencies and proportions as the Contract price. We undertake to pay you, at your first written request, without any disputes or objections, any amount or amounts within the limit of USD 7,115,034.00 … as stated above, not requiring from you to provide any proof or justification of your request for the amount defined in this document.

[2.] We hereby relieve you of the need to collect the debt from [BH] before presenting a request to us.

[3.] [Barclays] is bound with this obligation in its own name.

[4.] From the date of the issuance of the Guarantee [Barclays] shall be responsible for the payment of the total above mentioned amount in full at [Lukoil's] first written request submitted to [Barclays] before the expiry date if [BH] fails to fulfil the Contract provisions, on the condition that no amendment has been made to the Contract concluded between [Lukoil] and [BH] impacting the timely performance of the Works under the Contract.

[5.] We hereby agree that no amendments nor addenda to the Contract, nor any contractual documents made by you and [BH] shall relieve us from our responsibilities under this Guarantee, and we hereby waive the right to be notified of such amendments or addenda.

[6.] The conditions of this Guarantee are as follows:

[7.] The GUARANTEE shall be valid until April 30, 2014 (the "Expiry Date")

[8.] This guarantee shall be governed by English law.

Yours faithfully…"

7. Various steps were taken thereafter either to amend or reissue the Bank Guarantee as follows:

i) On or about 15 November 2011, as evidenced by a letter from Barclays to Lukoil of that date amending the Contract number in #1. from "CY-11-8015-0600" to "CY-11-8015-0060";

ii) On or about 29 April 2014, as evidenced by a letter from Barclays to Lukoil of that date amending the date in #7 from 30 April 2014 to 28 February 2015;

iii) On or about 23 December 2014, as evidenced by a letter from Barclays to Lukoil of that date amending the date in #7 from 28 February 2015 to 30 April 2015;

iv) On or about 20 April 2015, as evidenced by a letter from Barclays to Lukoil of that date amending the date in #7. from 30 April 2015 to 31 July 2015;

v) On or about 23 July 2015, as evidenced by a letter from Barclays to Lukoil of that date amending the date in #7 from 31 July 2015 to 31 October 2015.

8. On 22 April 2015 and 26 July 2015 BH wrote to Lukoil enclosing, respectively, the letters from Barclays dated 20 April 2015 and 23 July 2015 referred to at paragraphs 7(iv) and 7(v) above and each time stating:

"[BH] undertakes that: (i) it will not challenge or take any steps to cancel or invalidate the Bank Guarantee at any time during the period for which it has been extended i.e. to [31 July 2015 / 31 October 2015]; and (ii) it has not made any such challenge or taken any such steps as at the date of this letter. [BH] hereby waives any right to restrain or challenge the Bank Guarantee based upon or related in any way to the extension of the expiry date to [31 July 2015 / 31 October 2015]."

9. By a letter from Lukoil to Barclays dated 26 October 2015, Lukoil made a written request for Barclays to pay Lukoil the sum of US$7,115,034. The original guarantee was attached to the demand. So far as may be material, the terms of the demand were:

"In accordance with the terms of the GUARANTEE NO. MRGI55024596 issued by Barclays Bank PLC ("Guarantor") on 2 November 2011, as amended and extended ("Guarantee"), LUKOIL MID-EAST LIMITED ("Beneficiary") hereby PRESENTS and DEMANDS that the Guarantor makes payment of USD 7,115,034.00 (United States dollars seven million one hundred and fifteen thousand and thirty four only).

In compliance with the Guarantee, upon receipt of this DEMAND the Guarantor is required to pay "…without any disputes or objections, any amount or amounts within the limit of USD 7,115,034.00 … not requiring from you to provide any proof or justification of your request for the amount defined in this document…"

…

The Guarantor should treat this PRESENTATION and DEMAND as COMPLETE.

Notwithstanding and without prejudice to the fact that the Beneficiary is not required to prove or justify any amount under the Guarantee, the Beneficiary makes this DEMAND as Baker Hughes Asia Pacific LTD ("Contractor") is in breach of its obligations under the Contract referenced CY-11-8015-0060 signed on the 14 August 2011 between the Beneficiary and Contractor for the drilling and completion of production wells in the Mishrif formation in West Qurna (Phase 2) Contract Area (Iraq) on a Turn-key Basis ("Contract").

Specifically, Contractor has failed to achieve any of the Key Milestones on or before the corresponding Key Dates set out in Appendix No. 12 of the Contract. Accordingly, Beneficiary notified and demanded Liquidated Damages due from Contractor in the amount of USD 14,230,068 by way of notices issued on 22 February 2015 and 2 March 2015. Contractor has failed to make payment of these Liquidated Damages and the Beneficiary hereby exercises its right under the Guarantee for the due performance of Contractor's obligations by the Guarantor by reference to the following provisions of the Guarantee:

"[Guarantor] relieve[s] you of the need to collect the debt from Contractor before presenting a request to [Guarantor]"; and

"[Guarantor] is bound with this obligation in its own name"; and

"[Guarantor] hereby agree[s] that no amendments or addenda to the Contract, nor any contractual documents made by [Beneficiary] and the Contractor shall relieve [Guarantor] from our responsibilities under this Guarantee, and [Guarantor] hereby waive[s] the right to be notified of such amendment or addenda".

We look forward to receiving Guarantor's confirmation of remittance by return."

10. By a letter from Barclays to Lukoil dated 29 October 2015, Barclays wrote:

"Dear Sir(s)

We refer to your recent letter and advise that we do not consider your claim on our Performance Guarantee to be valid due to the following reason(s)

1. The Condition of "no amendment has been made to the Contract Concluded between [Lukoil] and [BH] impacting the Timely performance of the Works under the Contract" is not mentioned in the demand.

If you have any questions please call our Customer Service Team on above mentioned telephone number.

Yours faithfully…"

11. By the time that Lukoil received Barclays' rejection the guarantee had expired, making it impossible for Lukoil to submit another demand that met the objection raised by Barclays' rejection letter.
12. After a brief passage of correspondence, Lukoil issued proceedings on 2 December 2015 and issued its application for summary judgment on 16 December 2015. Barclays served a Defence on 22 December 2015. A consent order for directions was made on 5 January 2016. On 12 January 2016 Barclays issued its cross-application for summary judgment. Evidence was filed on both sides and the case came on for hearing on 27 January 2016.

The Issue

13. By its Defence, Barclays restated and slightly amplified the grounds for rejection that it had set out in its rejection letter on 29 October 2015. By paragraph 6 of the Defence it pleaded:

"On the proper construction of the Bank Guarantee (or by virtue of an implied term to such effect), Barclays was only obliged to pay upon Lukoil's first written request on the condition that (among other things) such request expressly stated or informed Barclays that no amendment had been made to the Contract impacting the timely performance of the Works under the Contract (the "Condition")"

14. Paragraph 6 of the Defence is and remains the basis upon which Barclays defends the application for summary judgment. It is common ground that, if Lukoil's first written request was required expressly to state or inform Barclays that no amendment had been made to the Contract impacting the timely performance of the Works under the Contract, Lukoil's request did not satisfy that requirement.

Barclays' Submissions

15. Barclays' starting point is that when construing demand guarantees or performance bonds, there "is a bias or presumption in favour of the construction which holds a performance bond to be conditioned upon documents rather than facts." I.E. Contractors v Lloyds [1990] 2 Lloyd's 496, 500 Col 1 per Staughton LJ. That is a correct but partial citation from Staughton LJ's judgment, which is immediately followed by the words "But I would not hold the presumption to be irrebuttable, if the meaning is plain." Read in context, Staughton LJ was contrasting (a) the likelihood that a demand under a performance bond would be conditioned upon the presentation of documents alleging failure by a contracting party to perform with (b) the unlikelihood that the demand would be conditioned upon proving the fact of the failure to perform that the documents allege. This appears from the immediately preceding citation from the judgment of Ackner LJ in Esal (Commodities) Ltd v Oriental Credit Ltd [1985] 2 Lloyd's Rep 546, where the relevant terms of bond were "We undertake to pay the said amount on your written demand in the event that the supplier fails to execute the contract in perfect performance …" The Court of Appeal in I. E. Contractors said that there were three possible meanings for the Esal wording: (i) that no more than a written demand was required, (ii) that the demand must assert a failure to perform the contract, or (iii) that there must in fact have been a failure to perform. The Court of Appeal in Esal itself had directly considered the second and third possible meanings because they were the potential interpretations proposed by Counsel in that case. The Court of Appeal unanimously rejected the third possibility in a passage that led directly to Staughton LJ's reference cited above and to the (partial) citation to which I have referred.
16. The presumption to which Staughton LJ referred and upon which Barclays places great reliance in this case is of limited assistance in interpreting the Bank Guarantee because neither party has at any stage contended that Lukoil must not merely state that no amendment has been made to the Contract impacting the timely performance of the Works under the Contract but must also prove the stated fact. The main, if not the only, relevance of the presumption lies in the observations underpinning it, namely that the demand must at least enable the Bank to determine from the demand that its obligation is triggered; or, as Teare J expressed a similar but not identical point in Sea Cargo Skips AS v State Bank of India [2013] 2 Lloyd's Rep 477 at [27]:

"In the field of performance bonds … the banks who provide the bonds deal with documents. Banks must honour their obligation to pay if documents which conform with the requirements of the bond are tendered. Thus the banks must determine, on the basis of the presentation alone, whether it appears on its face to be a complying presentation…"

17. What appears from I. E. Contractors, Esal, Sea-Cargo Skips AS and many other authorities is that it is the terms of the guarantee itself that will determine the formal requirements, if any, with which a demand must comply in order to be valid. This is shown by the facts of I. E. Contractors where a number of different instruments were held to give rise to different formal requirements for the making of a demand, including one instrument where no document was required to be produced with the demand: see 500 at Col 2. As Staughton LJ there said, citing Goddard LJ in Rayner (JH) & Co Ltd v Hambros Bank Ltd [1943] KB 37:

"The question is "What was the promise which the bank made to the beneficiary under the credit and did the beneficiary avail himself of that promise?"

The degree of compliance required by a performance bond may be strict, or not so strict. It is a question of construction of the bond. If that view of the law is unattractive to banks, the remedy lies in their own hands."

And, at 503, Col 1, Buckley LJ expressed the same principle, which is beyond doubt:

"I am in entire agreement with the proposition that to discover what the parties intended should trigger the indemnity under the bond involves a straightforward exercise of construction, or interpretation of the bond to discover the intention of the parties in that respect."

18. Because different authorities typically discuss different wordings, they are likely to be of limited assistance as aids to interpretation except to the extent that they state general principles of construction. That said, the general principles for the construction of commercial documents in general and on demand guarantees in particular are well known and do not need restatement here.
19. The starting point is that the Bank Guarantee does not expressly say that the demand shall include a statement that no amendment has been made to the Contract impacting the timely performance of the Works under the Contract. Therefore a process of interpretation is required to see if that is what it means. That process takes place in the knowledge that in prior cases on different wordings the Court of Appeal has held that it is not essential for there to be an express statement of what is to be included in the demand and has held that words such as "We undertake to pay the said amount on your written demand in the event that the supplier fails to execute the contract in perfect performance" (Esal) in the context of that instrument required a statement to the effect that the supplier had failed to execute the contract properly; and that words such as "we undertake to pay you, unconditionally, the said amount on demand, being your claim for damages brought about by the above named principal" (I. E. Contractors) in the context of that instrument required the demand to state that it was a claim for damages brought about by the contractors. The principle underpinning that conclusion in each case was that the Bank needed to know whether, on the face of the demand, the obligation to pay was triggered.
20. Turning to the present Bank Guarantee, there is a tension between [4] and [5] which goes to the heart of the dispute about interpretation of the document as a whole. It is not controversial that [1] sets out Barclays' undertaking and that, if read in isolation, [1] imposes no formal requirement for the making of a demand beyond that it should be in writing. Specifically, Lukoil would not under [1] alone be required "to provide any proof or justification" of its request for the amount demanded. For present purposes I am prepared to accept (without deciding) Barclays' submission that "justification" means explanation of how the sum claimed is calculated, computed or otherwise made up so as to provide the right to claim it.
21. [2] and [3] do not add to or assist in the process of interpretation that concerns the Court.
22. A number of points arise on [4]. First, Barclays does not contend that the demand must include a statement that the Bank Guarantee has not expired. It explains this by saying that Barclays, having issued the Bank Guarantee and any subsequent amendments to it will know whether or not it has expired without being told. It is therefore able to determine, in this respect, whether its obligation is triggered without any statement being made in the demand. Second, the words "if the Contractor fails to fulfil the Contract provisions" are analogous to those that appeared in Esal and I. E. Contractors and are nearly adjacent to the reference to the Company's first written request submitted to Barclays. Third, the words "… on the condition that no amendment has been made to the Contract …" are part of the same sentence as the reference to the Contractor failing to fulfil the Contract provisions, though separated from them by a comma. This proximity to words that are similar to those in Esal and I. E. Contractors gives some support to the submission that if the earlier words require a statement to be made in the demand, the later words should do so too.
23. [5] is clear in its terms and meaning that no amendments or addenda to the Contract shall relieve Barclays from its responsibilities under the Bank Guarantee and that Barclays waives the right to be notified of such amendments or addenda. Barclays refers to the fact that it is a principle of suretyship, but not in relation to performance bonds, that a variation in the terms of the agreement between the creditor and the debtor which could prejudice the surety will (absent the surety's consent) discharge the surety from liability. Three points arise. First, the Bank Guarantee is not alleged to be a contract of suretyship, so the principle does not apply. Second, it has been suggested (for example in Caterpillar v Mutual Benefits Assurance Company [2015] EWHC 2304 (Comm) at [21]) that a term agreeing that variations to the underlying contract shall not affect the liability of a party issuing a performance bond may have been inserted "to put beyond doubt that the rule applicable to true guarantees did not apply". While that is a possibility, the intention or motivation of the parties is not in evidence in this case (and would be inadmissible as an aid to construction if it were). What matters is the substance of the term, the meaning of which is clear. Third, the waiver of any right to be notified of any amendments or addenda goes beyond the clarification that no amendments or addenda will relieve Barclays of its responsibilities under the Guarantee and itself requires to be given due attention in the interpretative process.
24. I note in passing Lukoil's submission in reply that the last sentence of [4] may also be an historical throwback. I am not in position to form a view either way on the reasons why it may have been included, though that explanation seems possible. As with [5], the Bank Guarantee contains [4] and [5] for whatever reasons. The result is a document that verges on the incoherent; but it is the obligation of the Court to find the meaning of the instrument, whatever motivations that may have affected the parties in their negotiations or in deciding what words to use.
25. There is (at least) a tension between Barclays' case in relation to [4] and [5] when they are read in context. The Court is required to interpret the Bank Guarantee as a whole and any individual words, clauses or provisions that it contains are to be interpreted in context. That context includes an appreciation of the terms of the Contract, by virtue of the references to it in [1]. And, without restating well known principles extensively, the Court will not willingly endorse or adopt an interpretation that is commercially absurd unless compelled to do so by very clear words.
26. The first problem in interpreting [4] and [5] when they are read in context stems from Barclays' correct acceptance that, because of [5], no amendment to the Contract, even if it impacts the timely performance of the Works under the Contract, can affect Barclays' responsibilities under the Bank Guarantee. In other words, an amendment to the Contract which impacts the timely performance of the Works under the Contract is irrelevant to whether or not Barclays' obligation to pay under the Bank Guarantee is triggered. Therefore, the principled justification that underpinned the requirement that facts be stated in cases such as Esal and I. E. Contractors is absent.
27. Second, Barclays' submission that it is a pre-requisite that a valid demand should include a statement about such amendments is directly contrary to the clear intention of [5] which is not merely that such amendments are irrelevant to Barclays' obligation but also that Lukoil is not obliged to inform Barclays of them. Barclays' attempted rationalisation of its position was to suggest that [5] merely refers to the duration of the contract, but that [4] requires a statement to be made when making a demand. This seems to me to be counter-intuitive and commercially sterile to the point of absurdity. If Barclays has any legitimate interest in knowing about an amendment that impacts on timely performance, that interest would be just as compelling (or uncompelling) in the period before any allegations of default and demands on the Bank Guarantee as they would be at the time of making the demand.
28. Barclays submitted that it had an interest in knowing whether or not there had been any amendment made to the Contract impacting the timely performance of the Works under the Contract because such an amendment might increase its risk. I could accept in theory that an amendment which foreshortened the time for BH to complete its original scope of the Works, or an amendment which increased the scope of the Works to be completed in the original time allowed would increase the risk of contractor's default. But that theoretical possibility ignores the contractual realities, of which Barclays and Lukoil were always aware:

i) It is fanciful to the point of absurdity to imagine that a contract of this nature would be subjected to an amendment that foreshortened the time for completing the Works as originally defined, and Mr Cutress was not able to suggest any realistic circumstance in which that might happen;

ii) If the scope of the Works were to be increased, the contractual machinery of Variations under Article 22 provided for extensions of time that were appropriate for the revised scope of the Works. So, assuming that Variations constituted an amendment to the Contract within the meaning of [4], any increased risk to Barclays is attenuated if not removed altogether.

29. For these reasons, it seems to me that to interpret [4] as imposing upon Lukoil an obligation to state in the demand that no amendment had been made to the Contract impacting the timely performance of the Works would be to require Lukoil to declare something that was irrelevant to Barclays' obligation and which was unnecessary to enable Barclays to know whether its obligation to pay had been triggered. For that reason alone, I consider that Barclays' interpretation lacks any commercial or principled legal justification.
30. There is a second major objection to interpreting the Bank Guarantee so as to make the statement that no amendment had been made to the Contract impacting the timely performance of the Works a pre-requisite to the validity of the demand. Given the mechanism for altering the scope of the Works (with their expected impact upon timely performance of the Works either as originally defined or later amplified), it would be almost inconceivable that, in the course of a huge construction contract such as the Contract, there would be no changes to the scope of the Works that would impact on timely performance. So it is almost inconceivable that, on Barclays' construction, Lukoil would ever be able to make the statement that was required to constitute a valid demand. The Bank Guarantee would therefore be rendered virtually useless on Barclays' interpretation. That, to my mind, pushes the interpretation beyond the realms of being unjustified into the realms of commercial absurdity.
31. Mr Cutress attempted to refine his submission by saying that the amendments being referred to in [4] are amendments adversely prejudicing timely performance. Pursuing that submission, and consistently with his submission that the demand was concerned with assertions of fact rather than proof of the facts asserted, he submitted that Lukoil was obliged to look at all amendments that might have impacted on timely performance of the works and to decide whether it could, in all good commercial conscience, state that no amendment had been made to the Contract impacting the timely performance of the Works under the Contract; and it would be required to do so in the knowledge that its assertion of fact (and not the truth of the fact asserted) was the pre-requisite to a valid demand and payment under the Bank Guarantee and that its assertion may be shown to be wrong in due course. To my mind, this merely emphasises the absurdity of introducing this irrelevance and elevating it to be a pre-requisite to validity of the demand.
32. For these reasons, I conclude that there is no principled justification for interpreting [4] as meaning that there had to be a statement in the demand that no amendment had been made to the Contract impacting the timely performance of the Works under the Contract in order for a demand under the Bank Guarantee to be valid. I would go further and conclude that to adopt Barclays' interpretation would be commercially absurd. In the absence of clear words requiring the Court to adopt such an interpretation I decline to do so.
33. Barclays was insistent that the Court had to expound the true meaning of [4] if it rejected Barclays' interpretation. I do not agree and decline the invitation on the basis of the submissions I have received. However, I have already declared my view that the Bank Guarantee when viewed as a whole is virtually incoherent. In those circumstances, I would not shrink from concluding that the last words of [4] should be treated as having no effect for the purposes of the making of a demand and, to that extent at least, are to be regarded as surplusage. If it is right that they are an historical relic that has washed up in a modern Bank Guarantee, that would not be unique and would lend support to a finding that they should be treated as surplus to modern requirement.