Finality Of Payments Under On Demand Bond

It is well recognised that the purpose of On Demand Bonds is to give the beneficiary an irrevocable right to be paid. The only exception to this is if a fraudulent demand is made.

In the case of Wuhan Guoyu Logistics Group Co Ltd v Emporiki Bank of Greece SA [2013] EWCA Civ 1679, however, the English Court of Appeal was asked to consider whether the unusual circumstances of the case altered the position.

Facts

A Bond Call was made in June 2011. It was accepted this was made in good faith. In December 2012, Emporiki Bank paid USD10.5m into an escrow account. The underlying dispute between the Wuhan and another party was being dealt with in an arbitration and there was a separate court action in connection with the Bond.