3VB Team Obtains Injunction over Performance Guarantees in Support of US$37m DIFC-LCIA Arbitration

Farhaz Khan and William Day, instructed by John Fordham and Emily Rivett of Stephenson Harwood LLP, successfully obtained without notice and defended at a contested return date an injunction prohibiting payment under a guarantee structure involving banks in London and the Middle East. Farhaz and William appeared for FTSE 250 company Aggreko.

The underlying dispute relates to the use of Aggreko’s temporary power generators in Yemen by the Al Sadi Trading Group (ATG). Aggreko terminated the dry hire contract on the basis of US$ 30 million in outstanding fees, and ATG thereafter apparently sought to make a US$7 million demand under the performance guarantee structure.

HHJ Pelling QC (sitting as a Judge of High Court) accepted Aggreko’s submissions at the ex parte hearing and on the return date that there was a seriously arguable case that the performance guarantee structure had terminated alongside the underlying agreement between Aggreko and ATG.

The Judge also accepted Aggreko’s application for permission to serve out notwithstanding an exclusive jurisdiction clause in favour of Yemen in the Performance Guarantee and an arbitration clause governed by the DIFC-LCIA rules in the underlying agreement between Aggreko and ATG. On the return date, the claim between Aggreko and ATG was stayed under section 9 of the Arbitration Act 1996 pending a DIFC-LCIA arbitration, but the Court maintained interim injunctive relief to protect Aggreko’s position in the meantime.