Buyers under shipbuilding contracts terminated the contracts and claimed payment under refund guarantees in respect of instalments paid. The guarantor raised numerous defences, including (1) that the guarantees created a secondary, not primary, liability conditional upon the builder being liable under the contracts; and (2) that the guarantees (which had been issued by the SWIFT messaging system) were not signed, as required by the Statute of Frauds.

The claimants, represented by Stephenson Harwood LLP, were successful.


  1. The payment obligation arose out of a provision in each guarantee which stated that payment was "on demand" against "a signed statement certifying that the buyer's demand has been made in accordance with Article X of the contract and that the builder has failed to make the refund". For this and other reasons the guarantee was, as a matter of construction, an "on demand" guarantee.
  2. The Statute of Frauds (which requires guarantees to be signed) does not apply to "on demand" guarantees.
  3. If a signature had been required, the SWIFT authentication would have been sufficient. The word "signed" in the Statute of Frauds does not necessarily involve signature by an individual with a pen, and it is sufficient that the guarantor's name is written or printed in the document. The guarantor's name, although automatically generated, appeared in the header of the SWIFT message as a result of the guarantor voluntarily sending the message. This method of authentication by sending is equivalent in modern times to authentication by signing and is therefore sufficient for the purposes of the Statute of Frauds.  

(WS Tankship II BV v Kwangju Bank Ltd and Seoul Guarantee Insurance Co [2011] EWHC 3013 (Comm))