P&K Insights: Performance Bond Call

𝘞𝘩𝘦𝘳𝘦 𝘴𝘩𝘰𝘶𝘭𝘥 𝘵𝘩𝘦 𝘤𝘰𝘯𝘵𝘳𝘢𝘤𝘵𝘰𝘳 𝘧𝘪𝘳𝘴𝘵 𝘨𝘰 𝘵𝘰 𝘴𝘦𝘦𝘬 𝘢 𝘳𝘦𝘮𝘦𝘥𝘺?

It is generally challenging for a contractor to prevent an on-demand performance bond from being called on or to prevent a bank from making payment after an on-demand bond call. Nonetheless, if the call on such a bond is fraudulent or unconscionable, Singapore law allows the contractor to apply to a court for a permanent injunction or temporary restraining order to prevent the employer from calling on the bond.

With the introduction of the SIAC Rules 2025, an emergency arbitrator is now equipped with the power to issue protective preliminary orders (“PPO”). Where an employer and contractor had agreed to arbitration pursuant to the SIAC Rules 2025, there arises a question as to whether a contractor who seeks to stop a bond call from being called has to first apply for a PPO, before applying for a court-ordered interim measure under Singapore Arbitration Act 1994 (“IAA”).

This article written by Mino Han and Daven Salim seeks to review the interplay between the PPO procedure and the availability of court-ordered interim measure under the IAA, in preventing an employer from making a call on a performance bond.