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ARTICLE · 15 JULY 2014

Bonds: Style Over Substance?

MacRoberts
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The ongoing saga of the Scottish Coal Company liquidation provides the background to East Ayrshire Council v Zurich Insurance [2014] CSOH 102.

United KingdomLitigation, Mediation & Arbitration
Julie Hamilton
Julie Hamilton
Shona Frame
Shona Frame
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Background

The ongoing saga of the Scottish Coal Company liquidation provides the background to East Ayrshire Council v Zurich Insurance [2014] CSOH 102.

East Ayrshire Council (EAC) granted planning permission for a surface mine at Dalfad subject to restoration obligations on Scottish Coal. These obligations were secured by a restoration bond granted by Zurich Insurance. Following Scottish Coal's liquidation, it and its liquidators, were unable to carry out the restoration work.

EAC served a demand on Zurich to make payment of £3.344m in terms of the bond.

Relevant Bond Provisions

Clause 2.2: "... following the service upon the cautioner of a certificate of default the cautioner shall ... pay the sum demanded..."

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