CR Construction (UK) Company Limited v Barclays Bank Plc
| Judge | His Honour Judge Stephen Davies |
| Judgment | 4 February 2026 |
| Jurisdiction | England & Wales |
| Claimant | CR Construction (UK) Company Limited |
| Defendant | Barclays Bank Plc |
Summary
An employer called on a performance bond for over 2.4 million pounds in liquidated damages. The contractor applied for an injunction to stop the bank paying and to claw back a payment the bank had already received under a counter-guarantee. It said the demand was defective, that the bond had been discharged, and that nothing was due.
The bank said the application was misconceived, because the only ground on which a court will restrain a bank from paying under a performance bond is fraud, and this was not a fraud case.
His Honour Judge Stephen Davies refused the injunction. A performance bond is close to cash, and absent clear fraud the bank must pay. The contractor's arguments about the demand, discharge and set-off did not meet that test, it had delayed, and the integrity of the bond market told strongly against interfering.
Background and facts
CR Construction, the contractor, was the account party under a performance bond dated 29 March 2022 issued by Barclays in favour of Northern Gateway, the employer. The bond was backed by a counter-guarantee from another bank.
The employer made a demand under the bond for 2,475,441.02 pounds, said to be liquidated damages due from the contractor. The contractor applied for an interim injunction to restrain the bank from paying the employer, and to require the bank to return the sum it had received under the counter-guarantee.
The contractor put its case on three grounds: that the demand was strongly arguably not made in accordance with the bond; that the bond had strongly arguably already been discharged by the contractor's acceptance of the employer's repudiatory breach of the underlying contract; and that nothing was strongly arguably due, because it could dispute the quantum or set off retention monies exceeding the liquidated damages.
The issue
The question was whether the court should injunct the bank from honouring the bond. That turned on the autonomy of a performance bond and the narrow exception to it, and on where the balance of convenience lay.
The decision
His Honour Judge Stephen Davies refused the injunction. A performance bond is autonomous from the underlying contract, and the applicable principles were summarised in Autoridad del Canal de Panama v Sacyr SA [2018] 1 All ER (Comm) 916. A bank must pay against a conforming demand, and the court will not restrain it save in a case of clear fraud.
"on any view this is not a fraud case, which is the only case on the authorities where injunctions against banks to restrain their performance of their obligations against banks would normally be granted."His Honour Judge Stephen Davies, paragraph 79
The contractor's arguments about the form of the demand, the alleged discharge of the bond, and its set-off and quantum points did not turn the case into one of fraud, and so did not justify an injunction. The contractor had also delayed: it could have challenged the employer's conduct and the certificates in February 2025 but did nothing for eleven months.
Weighing the balance of convenience, the judge gave particular weight to the wider consequences of restraining a bond call:
"the wider reputational damage to the performance bond market, especially in the construction sector and the UK, is a very significant reason in itself and justifies the refusal of the injunction."His Honour Judge Stephen Davies, paragraph 81
The injunction was refused.
Practical implications
A performance bond is close to cash, and the courts guard that quality. A contractor that wants to stop a bank paying under an on-demand bond faces a very high bar, because the only recognised exception is clear fraud in the demand. Complaints that the demand is technically defective, that the underlying contract has been terminated, or that sums are disputed or subject to set-off will not usually be enough.
Bring these disputes on the underlying contract, not the bond. The contractor's real complaints, that the liquidated damages were wrong or that retention should be set against them, are matters for a claim against the employer, not a reason to freeze the bank. The bank pays first, and the parties fight over the money afterwards.
Move quickly if you have a genuine ground. Delay counts heavily against an injunction to restrain a bond. A contractor that sits on a complaint for months, when it could have acted, will struggle to persuade the court to intervene at the last minute when the demand is made.
The integrity of the bond market is itself a reason to refuse relief. The court treated the reputational damage to the performance bond market as a weighty factor, because the value of these instruments depends on beneficiaries being confident they will be paid. Anyone seeking to restrain a call should expect the market interest to weigh against them.
Practice points
- A performance bond is autonomous and close to cash; a court will restrain a bank from paying under it only in a case of clear fraud.
- Complaints that the demand is defective, that the bond has been discharged, or that sums are disputed or subject to set-off will not, without fraud, justify an injunction against the bank.
- Take disputes about the underlying liquidated damages or retention against the employer on the contract; the bank pays first and the parties resolve the money afterwards.
- Act promptly; delay in raising a genuine ground weighs heavily against an injunction, and the integrity of the bond market is itself a reason to refuse relief.