diff --git a/org.eclipse.jdt.core.tests.model/src/org/eclipse/jdt/core/tests/model/JavaProjectTests.java b/org.eclipse.jdt.core.tests.model/src/org/eclipse/jdt/core/tests/model/JavaProjectTests.java
index 6357803..250b66e 100644
--- a/org.eclipse.jdt.core.tests.model/src/org/eclipse/jdt/core/tests/model/JavaProjectTests.java
+++ b/org.eclipse.jdt.core.tests.model/src/org/eclipse/jdt/core/tests/model/JavaProjectTests.java
@@ -37,7 +37,7 @@
 	super(name);
 }
 static {
-//	TESTS_NAMES = new String[] { "testAddExternalLibFolder6" };
+//	TESTS_NAMES = new String[] { "testBug360164" };
 }
 public static Test suite() {
 	TestSuite suite = (TestSuite) buildModelTestSuite(JavaProjectTests.class);
@@ -2389,4 +2389,36 @@
 		deleteProject("JavaProjectTestsInvalidProject");
 	}
 }
+// Bug 360164 - Compile error in XSDImpl
+// test that we can tolerate if a 1.4 project refers to an enum inside a library.
+public void testBug360164() throws IOException, CoreException {
+	String libPath = getWorkspacePath()+"JavaProjectTests/bin/bug360164.jar";
+	try {
+		this.createJavaProject("P", new String[] {"src"}, new String[] {"JCL_LIB", libPath}, "bin", JavaCore.VERSION_1_4);
+		IFile file = createFile("/P/src/X.java", 
+				"import p360164.Provider;\n" +
+				"import p360164.MyEnum;\n" +
+				"public class X {\n" +
+				"    int foo(Provider p) {\n" +
+				"        MyEnum e = p.getE();\n" +
+				"        switch (e) {\n" +
+				"        case ONE: return 1;\n" +
+				"        case TWO: return 2;\n" +
+				"        }\n" +
+				"        return 0;\n" +
+				"    }\n" +
+				"}"
+		);	
+		ICompilationUnit unit = (ICompilationUnit)JavaCore.create(file);
+		ProblemRequestor problemRequestor = new ProblemRequestor();
+		WorkingCopyOwner owner = newWorkingCopyOwner(problemRequestor);
+		unit.getWorkingCopy(owner, null);
+		assertProblems("Unexpected problems", 
+				"----------\n" + 
+				"----------\n", 
+				problemRequestor);
+	} finally {
+		this.deleteProject("P");
+	}
+}
 }
diff --git a/org.eclipse.jdt.core.tests.model/workspace/JavaProjectTests/bin/bug360164.jar b/org.eclipse.jdt.core.tests.model/workspace/JavaProjectTests/bin/bug360164.jar
new file mode 100644
index 0000000..134f3f6
--- /dev/null
+++ b/org.eclipse.jdt.core.tests.model/workspace/JavaProjectTests/bin/bug360164.jar
Binary files differ
diff --git a/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/lookup/BinaryTypeBinding.java b/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/lookup/BinaryTypeBinding.java
index 74dd0eb..8a84619 100644
--- a/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/lookup/BinaryTypeBinding.java
+++ b/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/lookup/BinaryTypeBinding.java
@@ -975,8 +975,14 @@
 }
 public boolean hasTypeBit(int bit) {
 	// ensure hierarchy is resolved, which will propagate bits down to us
-	superclass();
-	superInterfaces();
+	boolean wasToleratingMissingTypeProcessingAnnotations = this.environment.mayTolerateMissingType;
+	this.environment.mayTolerateMissingType = true;
+	try {
+		superclass();
+		superInterfaces();
+	} finally {
+		this.environment.mayTolerateMissingType = wasToleratingMissingTypeProcessingAnnotations;
+	}
 	return (this.typeBits & bit) != 0;
 }
 private void initializeTypeVariable(TypeVariableBinding variable, TypeVariableBinding[] existingVariables, SignatureWrapper wrapper, char[][][] missingTypeNames) {
diff --git a/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/lookup/LookupEnvironment.java b/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/lookup/LookupEnvironment.java
index 84d3e74..2e7fe97 100644
--- a/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/lookup/LookupEnvironment.java
+++ b/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/lookup/LookupEnvironment.java
@@ -74,6 +74,7 @@
 	private ArrayList missingTypes;
 	Set typesBeingConnected;
 	public boolean isProcessingAnnotations = false;
+	public boolean mayTolerateMissingType = false;
 
 	final static int BUILD_FIELDS_AND_METHODS = 4;
 	final static int BUILD_TYPE_HIERARCHY = 1;
diff --git a/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/lookup/UnresolvedReferenceBinding.java b/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/lookup/UnresolvedReferenceBinding.java
index 3038368..2da4984 100644
--- a/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/lookup/UnresolvedReferenceBinding.java
+++ b/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/lookup/UnresolvedReferenceBinding.java
@@ -55,7 +55,7 @@
 		}
 		if (targetType == null || targetType == this) { // could not resolve any better, error was already reported against it
 			// report the missing class file first - only if not resolving a previously missing type
-			if ((this.tagBits & TagBits.HasMissingType) == 0) {
+			if ((this.tagBits & TagBits.HasMissingType) == 0 && !environment.mayTolerateMissingType) {
 				environment.problemReporter.isClassPathCorrect(
 					this.compoundName,
 					environment.unitBeingCompleted,