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Who can sign a guarantee or an indemnity for a company? Whoever the company has actually authorised to sign it, under its own constitution and the law of the country where it’s incorporated, and that isn’t always the person whose name ends up on the signature line. In Ion Surety Company SA v Shapoorji Pallonji Mideast LLC [2026] EWHC 2758 (TCC), handed down on 27 October 2026, a Dubai company tried to get out of a £3.5m indemnity by arguing that the man who signed it had no authority to do so. It lost, but it took three years and a three day trial to get there, and the company relying on the indemnity had been told in writing that somebody else would be signing it.
Most business owners assume that if a document comes back signed, with the right company name on it and a board minute attached, the company is bound, and usually that’s right, but if the signatory turns out not to have had authority, you’re left arguing that the company is stopped from denying it, which is a harder and much more expensive argument than pointing to a properly signed deed.
What happened
Shapoorji Pallonji is a large construction group which set up a UK company in January 2020 to win its first UK project, a redevelopment in Barking. The employer wanted a £3.5m on-demand bond. Ion, a surety provider, agreed to issue one, but only if the group’s Dubai company, Shapoorji Pallonji Mideast LLC, gave it a cross company indemnity, which is a promise to repay Ion whatever Ion had to pay out under the bond.
Before the indemnity was signed, the group’s own finance team changed the signature block and told Ion (through the group’s insurance broker) that the Dubai company had no directors, that all power was vested in its Manager, a Mr Kakkar, under Article 10 of its memorandum of association, and that he could sign alone. The indemnity then came back signed by a Mr O’Leary, described as “Manager”, together with a board minute signed by a Mr Saini as “Company Secretary/Chairman”, and Ion issued the bond.
The UK company was wound up in August 2023, the employer called the bond, and Ion settled the employer’s claim for £3,657,684.29. The Dubai company refused to pay under the indemnity. Its argument that Mr O’Leary lacked authority first appeared in November 2025, two years into the proceedings, and it was expanded again a few days before skeleton arguments were due for trial.
Actual and apparent authority
Actual authority is the authority the company really gave the person who signed. Apparent (or ostensible) authority arises where the company, by what it says or does, leads the other side to believe the signatory has authority and the other side relies on that, so that the company can’t later deny it.
Actual authority was a question of Dubai law, as the law of the place where the company was incorporated. The experts agreed that someone who isn’t the formally appointed Manager can only sign if the proper organ of the company has formally authorised him at or before signing. Article 10 allowed Mr Kakkar to delegate his powers by written authorisation, and nobody could produce one. The judge (Adrian Williamson KC, sitting as a deputy High Court judge) accepted there was some force in that, but found that Mr Kakkar had delegated wide authority to Mr Saini, who had signed the company’s accounts as general manager and managing director and had signed the parent company guarantee on the same project, and that Mr Saini had in turn authorised Mr O’Leary through the board minute.
A lot of that rested on evidence the company chose not to give. None of Mr Kakkar, Mr Saini or Mr O’Leary was called as a witness, and the judge, applying Royal Mail Group Ltd v Efobi [2021] UKSC 33, inferred that there was no adequate explanation for the signature. The burden of proof stayed with Ion throughout, but the judge was entitled to take into account that the company hadn’t called the people who could have explained what happened.
In case he was wrong about that, the judge also found apparent authority under English law, applying the conditions from Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 and the Supreme Court’s more recent requirement, in Law Debenture Trust Corporation plc v Ukraine [2023] UKSC 11, that the other side must have relied on the representation reasonably and not been put on inquiry. The board minute, the accounts and the memorandum of association together represented that the Dubai company had authorised the indemnity and that Mr Kakkar’s powers could be passed to others. Ion wouldn’t have issued the bond without the indemnity, and the judge found it had proceeded carefully throughout and had made the inquiries a reasonable person would have made. He also relied on the old rule in Turquand’s case, that someone dealing with a company in good faith can assume its internal procedures have been followed.
The Dubai company’s best point was that Ion had been told Mr Kakkar would sign, and nobody at Ion compared the signed document with what it had been told. Ion won anyway, but a quick question in May 2020 would have taken a lot of the argument out of the case.
Two Ion companies and the “black hole”
The Dubai company’s second argument was that the indemnity was given to Ion Surety, but the bond was issued by Ion Insurance, a US sister company, at the group’s own request (Ion had suggested the US entity “sounds better than Costa Rica”). The Dubai company’s counsel described the result as a black hole: the company with the claim hadn’t lost anything, and the company that had lost the money had no claim.
The judge didn’t accept that, as Ion Surety had reinsured 97.5% of Ion Insurance’s liability on the bond and paid it, which was a loss incurred “by virtue of” the bond within the wording of the indemnity. In any event, a clause in the indemnity allowed Ion to extend its benefit to another company that issued a bond at Ion’s request, and Ion had done that in May 2024. The Dubai company was ordered to pay £3.5m, the cap in the indemnity, which is a little less than Ion had paid out.
What the judgment doesn’t decide
This is a first instance decision of a deputy judge, and it turned heavily on its own facts and on the evidence the company didn’t call. The actual authority finding is about Dubai law as the experts described it, so it tells you nothing about how an English company’s board authorises someone to sign. The judge didn’t need to decide whether Ion Insurance could have claimed directly (including under the Contracts (Rights of Third Parties) Act 1999) or whether there was a claim for contribution, and the judgment doesn’t deal with costs or interest. Whether there will be an appeal isn’t known at the time of writing.
What to check before you accept a guarantee
Most owner-managed businesses won’t ever need a £3.5m on-demand bond, but the same problem comes up whenever one company stands behind another. A buyer’s parent company guaranteeing deferred consideration in a share purchase agreement, a guarantee of a tenant’s rent, or a group company backing a customer’s credit account all depend on the right person signing for the guarantor. This is a different question from a director guaranteeing their own company’s borrowing personally, which I’ve covered in the Doubtfire v Horrell case note and on my page about independent legal advice on personal guarantees.
For an English company, start with how it signs. Under section 44 of the Companies Act 2006 a company executes a document by its common seal, or by the signatures of two authorised signatories (any director, or the company secretary if there is one), or by one director signing in the presence of a witness who attests the signature. Guarantees are usually signed as deeds, and I’ve written separately about when a contract needs to be a deed. If the person signing isn’t a director, ask for the board resolution authorising them by name, and check the company name and number on the document match Companies House.
For an overseas company, the law of the country where it’s incorporated decides who can bind it, and that may be quite different from what you’re used to. Ask for a certified copy of its constitution and a board resolution naming the signatory, and on larger amounts consider asking for a legal opinion from a lawyer in that country confirming the company has the capacity to give the guarantee and that it has been properly authorised.
And if you’ve been told one person will sign and the document comes back signed by someone else, ask why before you rely on it, and get the answer in writing.
If you’re on the other side and giving the guarantee, assume you’ll be held to it. The judge had little sympathy for an authority argument raised years into the case by a company which had taken the benefit of the bond and the building contract, and which was the only party that knew how its own signatures had been authorised.
I draft and review guarantees and indemnities as part of business sales, purchases and commercial contracts, including parent company guarantees of deferred payments. If a guarantee has already been called and you’re in a dispute about it, that work goes to my Nexa colleagues who handle disputes day to day. Get in touch if you need some help.
Written by Steven Mather, a business solicitor acting on company sales and purchases. This is general information about the law, not legal advice on your situation. Law correct as at .
