Bank guarantees act as securities to ensure that contractors comply with their obligations under construction contracts. In situations where a contractor fails to meet its obligations, an employer has recourse to the bank guarantee, to secure payment for its losses. However, when a contractor is unable to perform its obligations on account of delays, failures, or breaches attributable to the employer, it is unfair for the employer to have recourse to the performance bank guarantees.
In such situations, contractors have the option to obtain an injunction from local courts/ tribunals, restraining the invocation of these performance bank guarantees. In this insight, we analyse the different grounds on which injunctions may be obtained on the invocation of guarantees under the laws of India, Australia, Singapore, Malaysia, England, Turkey, South Africa, Germany, China, USA, Sri Lanka, Pakistan, Sierra Leone, Hong Kong, and the UN Convention on Independent Guarantees and Standby Letters of Credit.