Central Térmica de Temane v Banco Santander: Spanish injunction no defence to demand bonds

The Commercial Court has ordered Banco Santander to pay about US$90.8m under two English law on-demand bonds, holding that a Spanish interim injunction did not engage the rule in Ralli Brothers because the place of performance was Mozambique.

In Central Térmica de Temane SA and another v Banco Santander SA [2026] EWHC 2587 (Comm), Calver J heard a Part 8 claim by a Mozambican power project employer (CTT) under performance and advance payment bonds issued for its contractor group. CTT demanded payment on 4 April 2025, specifying an account at a Mozambican bank. Santander accepted that the demands were valid. On 10 April, however, a Spanish court granted the contractor an ex parte injunction restraining payment, and Santander relied on it as an illegality defence.

Clause 7 of each bond required payment "to the account specified in the relevant demand". Calver J held that payment into that account was Santander's only performance obligation, so the place of performance was Mozambique, where payment was lawful. Receiving and considering demands in Spain, and preparing funds, were steps by which Santander equipped itself to perform, and did not count. He drew on Credit Agricole v Chailease, Cargill v Uttam Galva and Dana Gas.

The judge respectfully parted company with Bright J's obiter view in LLC EuroChem v Société Générale that a bank's receipt of and response to demands may form part of its performance of an on-demand bond. In his view, that conflated the bank's obligation with the beneficiary's obligation to make a demand. He also rejected Santander's two stage approach, which began with a presumptive place of payment. Here the contract supplied a contractual indication, and a bank wanting Spain could have chosen Spanish law or a clause fixing the place of payment.

On whether a foreign court order can engage Ralli Brothers, a point he addressed obiter, Calver J held that it can. He considered Litasco v Banque El Amana and Beneathco v RJ O'Brien clearly wrong to the extent that they excluded court orders. The rule rests on international comity and respect for territorial sovereignty, and judicial acts are as much an exercise of sovereign power as legislative or executive acts. Deutsche Bank v Receivers, which concerned act of state and recognition, did not suggest otherwise. The Spanish order also derived its binding force from legislation, making a distinction arbitrary. He found support in Maritza v Credit Agricole.

Also obiter, Santander would have failed on reasonable steps. It made no effort to have the injunction discharged and did not join CTT's discharge application, which the Spanish court dismissed in January 2026 and which is under appeal. The burden lay on Santander to show reasonable efforts, or that intervention would have made no difference, and it adduced no evidence. The judge rejected the claimants' suggestions that Santander had stalled or acted as the contractor's mouthpiece, finding no evidential support. He also rejected the argument that Santander should have paid before the injunction, since payment was not due until 11 April.

Calver J refused Santander's application for a stay of execution under CPR 83.7, and for a deferred payment order under CPR 40.11. No application notice had been issued, but he considered the point because it had been fully argued. A stay of judgment on an English law on-demand bond because of a home court injunction would be a special case, and Knowles J had refused one in National Infrastructure Development v Banco Santander. There had already been very substantial delay, the outcome of any Spanish discharge application was uncertain, and the Spanish law experts agreed that the risk of civil or criminal liability if Santander paid under an English order was limited. Maritza was distinguished because the place of performance there was France and a discharge hearing was imminent.