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Tetronics (International) Ltd v HSBC Bank plc (BlueOak Arkansas LLC intervening)  EWHC 201 (TCC)
The case provides a useful summary of the principles governing injunctions preventing banks from making a payment in respect of a call on a guarantee. It also serves as a reminder of the rarity of such injunctions.
In addition to meeting the exacting test of the fraud exception to the strict general rule that the court would not intervene to prevent a banker from making payment under a letter of credit following a compliant presentation of documents (Alternative Power Solution Ltd v Central Electricity Board  UKPC 31), ‘extraordinary facts’ are required for the injunction to be granted on the balance of convenience.
The judgment also highlights the following practical points for arbitration practitioners:
The dispute concerned a call on an advance payment guarantee (the Guarantee) made by BlueOak Arkansas LLC (Blue Oak), the beneficiary of the Guarantee, against HSBC Bank plc (the Bank). The Guarantee had been provided in relation to an underlying contract for an electronic waste recovery plant (the Supply Contract), which was governed by the law of the State of New York and contained an arbitration clause.
On 17 January 2018, the Bank received a call on the Guarantee by Blue Oak (the Call). Tetronics (International) Ltd (Tetronics), a customer of the Bank, made an application for an ex parte injunction on an urgent basis against the Bank, which was granted on 18 January 2018, preventing the Bank from making any payment in respect of the Call.
Tetronics also commenced an arbitration under the rules of the International Court of Arbitration of the International Chamber of Commerce (the ICC Arbitration) against Blue Oak under the Supply Contract. An emergency arbitrator was appointed in the ICC Arbitration as the claimant sought urgent interim relief in respect of the call on the Guarantee against Blue Oak (rather than against the Bank as was the case before the English court).
On 25 January 2018, Blue Oak applied for the Injunction to be discharged.
The court held that for the injunction to continue, Tetronics would have to satisfy the court that:
On the facts, the court held that:
Accordingly, the court discharged the injunction.
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