The Claimants (Central Térmica de Temane S.A. (CTT) and Citibank, N.A., London Branch (Citi)) sought declaratory relief and orders for payment of c.$100 million against Banco Santander S.A. (Santander), under two on-demand bonds governed by English law and subject to the exclusive jurisdiction of the English Court (the Bonds). The Bonds were procured by a third party group of companies, TSK, as conditions to contracts between CTT and TSK in relation to the design, construction, and operation of a 450MW combined-cycle power plant fuelled by natural gas in Mozambique. Citi was the Offshore Security Trustee pursuant to a security agreement between it and CTT.
On 3 April 2025, TSK issued a notice purporting to terminate its contracts with CTT. CTT disputed that termination and, on 4 April 2025, issued demands under the Bonds, seeking payment to its bank in Mozambique (the Demands). In accordance with the terms of the Bonds, Santander was obliged to make payment to the bank account specified in the Demands (i.e. in Mozambique) within 5 business days (i.e. by 11 April 2025).
On 10 April 2025, TSK obtained an ex parte interim injunction from the Court of First Instance No 5 de Móstoles in Spain, which was subsequently continued following a return date (the Spanish Interim Injunction). The Spanish Interim Injunction ordered Santander to restrain from payment under the Bonds. Santander sought to rely on the Spanish Interim Injunction as a complete defence to the claim pursuant to the Ralli Bros principle.
Four principal issues arose from Santander’s defence to the claim:
- Was the (or a) place of performance of the payment obligation under the Bonds the place where the Demands were required to be sent (Spain) or was the only place the location of the bank account specified in the Demands (Mozambique)?
- Could the Spanish Interim Injunction engage the Ralli Bros doctrine as a matter of principle?
- Was Santander entitled to rely on the Ralli Bros principle when it had taken no steps in Spain to seek to discharge the Spanish Interim Injunction?
- Should any order be stayed to permit Santander to seek the discharge of the Spanish Interim Injunction in light of the English judgment?
Calver J rejected Santander’s defence and its application for a stay of execution, and gave judgment in favour of the Claimants.
First, the place of performance of the payment obligation was as a matter of contract Mozambique ([70]–[122]). Under clause 7 of the Bonds, Santander was contractually obliged to make payment to the bank account specified in any demands under the Bonds. As in Credit Agricole Indosuez v Chailease Finance Corp [2000] 1 All ER (Comm) 399, the relevant contractual obligation was Santander’s obligation to pay CTT at the designated place of payment (i.e. Mozambique), and that was the place of performance. Further, Spain was not a place of performance on the basis of elements of performance allegedly being required in Spain. No elements of contractual performance (payment) were required in Spain; at most Santander might carry out in Spain acts preparatory to payment. To the extent that Bright J considered otherwise in his obiter remarks in EuroChem v Societe Générale S.A. [2025] EWHC 1938 at [459]–[461], that was wrong and the analysis of the Court of Appeal in Chailease (which was not cited to Bright J) was to be preferred. Thus, the Ralli Bros defence failed.
Second, had Calver J been required to determine the point, the Spanish Interim Injunction was capable of engaging the Ralli Bros principle ([123]–[170]). Two recent Commercial Court decisions, Litasco v Banque El Amana SA [2025] EWHC 312 (Comm) and Beneathco DMCC v RJ O’Brien Ltd [2025] EWHC 3079, were wrong to suggest that (interim) foreign court decisions could not engage the Ralli Bros principle, in particular in circumstances where breaching such foreign court order was itself illegal under the legislation of the foreign country (as was the case in relation to the Spanish Interim Injunction). That was the case notwithstanding that interim foreign court orders are not generally recognisable in England.
Third, and in any event, Santander could not rely on the principle in Ralli Bros because it had taken no steps to seek to discharge the Spanish Interim Injunction ([171]–[189]). It was common ground that Santander could have (at least to some extent) intervened in the Spanish proceedings, and Santander failed to prove either that it made reasonable efforts to have the injunction discharged or that its intervention would have made no difference. That was fatal to Santander’s reliance on Ralli Bros. By contrast, Santander’s failure to pay before the Spanish Interim Injunction was irrelevant, because the deadline for payment by Santander under the Bonds was one day after the Spanish Interim Injunction was granted ([190]–[203]).
Fourth, a stay of execution was not appropriate ([204]–[222]). The risk of any sanctions being imposed on Santander in Spain were it to pay in response to an English order were limited, and any such stay would be contrary to the commercial function of on-demand bonds as being ‘akin to cash’.
Nehali Shah KC and Moritz Grimm, with Stephen Houseman KC of Essex Court Chambers, acted for the Claimants, instructed by Greenwoods Legal Services Limited and Goodwin Procter (UK) LLP.
View Judgment