Welcome to the Spring 2022 edition of our biannual Banking Litigation Update, in which we highlight the most important cases and developments affecting UK financial institutions over the past six months.
Read the full Banking Litigation Update here.
We have also recorded a short video to provide a high level overview of developments during this period, which you can access here.
The content of this edition of our Banking Litigation Update is as follows:
COVID-19
- COVID-19 market disclosures and managing the associated litigation risks
- Court of Appeal confirms buyer entitled to repayment of advance where seller failed to deliver due to force majeure
- High Court finds Covid-19 pandemic did not trigger a material adverse change clause in a contract
- High Court finds Covid-19 pandemic amounted to force majeure event enabling party to terminate contract
- Overview of anticipated focus areas for BBLS litigation
Mis-selling and Misrepresentation
- High Court dismisses fraudulent misrepresentation claim relating to loan notes investment on limitation grounds
- Court of Appeal rejects novel argument that fraud victims should give credit for the “time value” of cash received as part of a fraudulent transaction
- High Court considers the requirement for “awareness” in implied misrepresentation claims
- High Court considers unlawful means conspiracy claim in the context of a repo fraud
Securities Litigation/Class Actions
- SPACs in the City: the emerging litigation and regulatory risks in England & Wales
- Court of Appeal refuses extension of time to plead dates of damage in claims arising out of oil spill, meaning some 28,000 claims cannot proceed
- Lloyd v Google: Supreme Court finds claim for compensation under data protection legislation cannot proceed on “opt-out” basis
- Merricks v Mastercard: the litigation risks for the financial services sector
- High Court decision in first s.90A FSMA claim to reach trial
- High Court strikes out shareholders’ claim barred by the reflective loss rule
- Reform of the UK prospectus regime – update on securities litigation risk
- CAT ruling in FX litigation: class action should be opt-in, not opt-out
LIBOR Transition
- LIBOR transition risks – November 2021 update
- Final part of UK LIBOR legislative solution receives Royal Assent
- US Enacts LIBOR Transition Law
Contractual Construction
- High Court finds settlement agreement released unknown fraud claims despite absence of express words covering fraud
- High Court considers whether onerous term in standard terms incorporated by reference
- High Court upholds settlement agreement relating to earlier proceedings to bar counterclaim, confirming that “unknown” claims can be released
- High Court considers exercise of contractual discretion to close out a customer’s position
- Party entitled to rely on force majeure clause where counterparty’s parent company became subject to US sanctions
Duties in Financial Services
- High Court upholds contractual terms setting out basis of relationship in dismissing breach of duty claim relating to introduction to third party investment scheme
- FCA consults on the new Consumer Duty
- Privy Council considers reformulated test for determining scope of duty of care owed by professional advisers
- DIFC Court finds Quincecare duty owed by bank to customer in context of phishing attack
- Supreme Court confirms UK government’s recognition of President of Venezuela, leaving Commercial Court to determine who is authorised to give instructions on behalf of Venezuelan Central Bank
- Court of Appeal clarifies requirements of claims in knowing receipt in failed claim against bank
- High Court finds no duty owed to investors by barrister advising scheme promoter
- Court of Appeal finds Quincecare duty is not limited to corporate customers and can (in principle) extend to protecting individuals
- High Court finds developers did not owe duty to cryptoasset owners to enable access to lost cryptoassets
Part 36 Offers/Costs
- Part 36 offer given effect even though it was not validly served
- A counterclaiming defendant can make a valid “claimant’s” Part 36 offer
- Cryptocurrency insufficient to satisfy test for security for costs
Disclosure and Privilege
- Changes to Disclosure Pilot – November 2021
- High Court finds there is no power to order a party to use its “best endeavours” to obtain and disclose documents that are not within its control.
- High Court finds no litigation privilege where expert instructed to try to find backing for potential counterclaim
- High Court orders banks to disclose documents under the Evidence (Proceedings in other Jurisdictions) Act 1975
- Bank’s privilege not lost despite opponent obtaining copies of documents in foreign proceedings
Governing Law and Jurisdiction
- Supreme Court confirms wide interpretation of “damage” for the purposes of the common law jurisdictional gateway for tort claims and clarifies when English law may apply to foreign law claims
- High Court finds defendant submitted to the jurisdiction by applying for extension of time to serve defence
Factual and Expert Evidence
- Court of Appeal finds court is not obliged to accept uncontroverted expert evidence
- High Court gives guidance on new requirements for trial witness statements
- Another decision regarding a failure to comply with the new requirements for trial witness statements under PD 57AC
- High Court orders witness statements to be redrafted due to serious non-compliance with PD 57AC
Other Significant Developments
- 2021 Global Bank Review – ESG: Creating a Purposeful Future
- High Court dismisses claim against banks involving allegations of front running/trading ahead on stop-loss orders on limitation grounds
- High Court continues to demonstrate robust approach to statute-barred claims, summarily dismissing derivatives investment claim against bank.
- Civil Justice Council consultation on changes to pre-action protocols – problematic aspects for commercial litigation
For further information, please contact:
Ceri Morgan, Herbert Smith Freehills
ceri.morgan@hsf.com
