DeHeng Won the Case to Stop Payment and Cancel a RMB 130 Million Bank Guarantee for a Chinese Contractor in the UAE

2022-07-25

Case summary:

For contractors of international engineering projects, the claim on bank guarantee is a huge potential risk, and one of the best ways to eliminate this risk is to stop the payment of and cancel bank guarantee. This case was tried at four different courts in the United Arab Emirates (UAE), and finally closed with the stop payment and cancellation of the bank guarantee issued by the Chinese contractor. It is a rare success among international engineering cases involving bank guarantee. 

On May 6, 2022, the first-instance judgment of the Commercial Court of Abu Dhabi entered into force, ordering the four defendants: Arabtec Construction LLC (UAE), Tav Tepe Akfen Investment Construction and Operations-Abu Dhabi (Turkey), Consolidated Contracting Engineering & Procurement Co-SAL (Lebanon) and Standard Chartered Bank Abu Dhabi, all EPC contractors of the main terminal of Abu Dhabi Airport, to terminate and revoke the performance and quality guarantees provided by the Chinese contractor, totaling 71.49 million dirhams (equivalent to about RMB 130 million), and ordering Standard Chartered Bank Abu Dhabi Branch to return the original two bank guarantees to the issuing bank in China.

But on the afternoon before the first-instance judgment came into effect, the accused filed an appeal for revoking the judgment. On July 21, 2022, after five sessions, the Court of Appeal decided to dismiss the appeal and uphold the judgment. 

With the concerted effort of director Jia Huaiyuan of DeHeng's Dubai Office and his colleagues Messieurs Hussain Al Bannai and Saeed, they successively won the case for the stop payment of bank guarantee at the Court of Appeal of Abu Dhabi, for canceling the bank guarantee at the Commercial Court of Abu Dhabi, and won the second trial of the Court of Appeal in Abu Dhabi, completely resolving the risk associated with the two bank guarantees. It is rare worldwide to win a case involving the same bank guarantee in different courts. This case is also a milestone for Chinese contractors which want to resolve the bank guarantee risk.