Intertec Contracting A/S v. Ceylinco Seylan Development Ltd. and Another – sllr 2002 volume 2 page 246

In the case between INTERTEC CONTRACTING A/S (Plaintiff) and CEYLINCO SEYLAN DEVELOPMENT LTD and another (Defendants), the court addressed whether the performance bond provided in the contractual arrangement constituted a conditional obligation dependent on an arbitrator’s finding or an unconditional, payable-on-demand guarantee. It was held that the performance bond imposed an autonomous and immediate obligation on the issuing bank, not dependent on any determination of contractual default through arbitration. The principle reaffirmed the autonomy of guarantees payable on demand, as established by the specific language of the bond and relevant legal precedents. This decision underscores the enforceability of unconditional performance bonds and clarifies that arbitration proceedings relate