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ARTICLE · 29 OCTOBER 2015

Saipem Australia Pty Ltd v GLNG Operations Pty Ltd (No 2) [2015] QSC 173: Performance security

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S.67J of the QBCC Act qualifies the use of a security provision, rather than the source of the entitlement to security.

AustraliaReal Estate and Construction
Andrew McCormack
Andrew McCormack
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KEYWORDS: CALLING ON SECURITY

KEY TAKEAWAY

Section 67J of the Queensland Building and Construction Commission Act qualifies the use of a security provision rather than providing the source of a party's entitlement to security.

Whether a performance guarantee acts to allocate risk has a decisive impact on the balance of convenience when seeking an interlocutory injunction.

Background

In 2011, Operations Pty Ltd (as agent for Santos GLNG Pty Ltd and others) (GLNG) engaged Saipem Australia Pty Ltd (Saipem) to construct a gas pipeline. Saipem was required to provide two bank guarantees (Performance Security).

  • Under clause 5.5(a), GLNG could call on the Performance Security to recover any loss resulting from Saipem's default under the contract or any debt due.

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