Santos Limited v BNP Paribas

Santos Limited brought an action against BNP Paribas regarding a bank guarantee issued by the latter. The guarantee was intended to secure Santos’ obligations under an engineering, procurement and construction (EPC) contract. Santos sought payment under the guarantee after BNP Paribas declined to honour a demand made by Santos, contending the demand did not comply with the terms of the guarantee. The court was required to determine whether the demand complied with the guarantee and whether there was a real prospect that Santos’ claim would succeed.

The guarantee required a demand "purporting to be signed by an authorised representative" of Santos and to be in a form of a letter annexed to the guarantee. The demand letter was signed by a General Manager Development, with the title "Santos Limited – GLNG Upstream Project" appearing above the signature. The court considered whether the demand was sufficiently compliant with the guarantee, applying the principle of strict compliance intelligently rather than mechanically. The court held that the demand was not compliant because the signatory was not an authorised representative of Santos as defined by the guarantee, and the demand did not comply with the form specified in the guarantee.

The court dismissed Santos’ claim, finding that there was no real prospect that the claim would succeed. The court also dismissed a third-party proceeding and ordered Santos to pay BNP Paribas’ costs of the proceeding. The court's reasoning was based on the strict interpretation of the guarantee's terms, which Santos did not meet. The court found that the requirement for the demand to be signed by an authorised representative and to be in the specific form was not met, and therefore, BNP Paribas was not obligated to pay under the guarantee.