Biannual Banking Litigation Update – Autumn 2023

Welcome to the Autumn 2023 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.

The content of this edition of our Banking Litigation Update is as follows:

Duties in Financial Services

• Court of Appeal confirms no duty owed by professional to non-client recipient of advice
• Privy Council confirms that unauthorised transfer by bank from client’s account must be brought as a debt claim: potential impact on Quincecare duty claims
• High Court refuses permission to continue derivative claim against bank as an alleged shadow director
• The Supreme Court’s judgment in Philipp v Barclays: key takeaways for financial institutions executing customer payments
• Transactions defrauding creditors: Court of Appeal favours wide interpretation of s.423 Insolvency Act 1986
• High Court gives guidance on the so-called creditor duty where a company faces solvency-threatening claim
• High Court finds defendant bank did not dishonestly assist company restructure to put assets beyond reach of creditors

Contractual Construction

• Contractual clauses requiring ADR before litigation – what happens when they are breached?
• High Court dismisses claim to recover US investment bank’s success fee in connection with the public offer of shares in Indian bank
• Force majeure: general assertions as to impact of Covid-19 and Brexit not sufficient to defeat summary judgment application
• A spectrum of possibilities: characterising a charge as fixed or floating after Re Spectrum Plus
• Supreme Court grants Ukraine permission to defend Russia’s US $3 billion Eurobond claim on grounds of duress
• Commercial Court finds indemnities covered negligence where no express reference
• High Court finds express terms of sub-participation agreement took precedence over framework master agreement
• High Court rules against Republic of Argentina in GDP-linked sovereign bond claim finding in favour of the claimants’ construction of provision “rebasing” GDP measurement

ISDA Master Agreement

• High Court reaffirms primacy of ISDA Master Agreement jurisdiction clause post-Brexit

Securities Litigation / Class Actions

• Group litigation orders: binding effect of decisions in test cases
• Latest guidance from the High Court on “opt-out” representative actions
• UK listing and prospectus regime reform: potential impact on securities litigation
• Herbert Smith Freehills contributes chapter to The Securities Litigation Review (9th Edition)
• Supreme Court decision means most existing UK litigation funding agreements likely to be unenforceable
• Court of Appeal hands down seminal collective proceedings judgments in the Trucks and Forex proceedings

ESG / Climate Change

• High Court refuses permission for climate-change activist shareholder to bring derivative action on behalf of Shell plc against its directors
• High Court confirms refusal of permission for ClientEarth derivative action against Shell directors
• Climate disputes – A 360-degree perspective

Sanctions

• High Court considers impact of Russian sanctions regimes in UK, EU and US on payment obligations under standby letter of credit
• High Court grants order for payment into court enabling company to redeem loan notes held by sanctioned entity
• Court of Appeal confirms judgments can be entered in favour of Russian sanctioned parties but leaves uncertainty in relation to the “ownership and control” test

Cryptoassets

• High Court sets aside interim proprietary injunction against cryptocurrency exchange Binance
• English court orders crypto exchange to transfer assets into England and Wales to facilitate enforcement of judgment

Disclosure and Privilege

• Litigation privilege not restricted to parties to litigation, and other helpful points regarding privilege
• English High Court sets aside Bankers Trust disclosure orders against Australian banks
• Privilege not lost where email containing legal advice found on employee’s work laptop

Procedural Developments

• Expert witnesses: High Court grants permission for change of experts on condition of disclosure of certain documents prepared by the experts or recording their views
• Court of Appeal provides further clarification on the limitation period in fraud claims
• Late amendments to statements of case: helpful guidance from the Court of Appeal
• Asymmetric jurisdiction clauses: French court refers questions of validity to CJEU
• Part 36 offers to settle: very high claimant offer did not bring costs benefits as not a genuine attempt to settle
• Commercial Court takes rare decision to refuse enforcement of arbitration award on public policy grounds in crypto case
• Article published: The interplay between data protection rules and civil litigation procedure – some judicial guidance (finally)
• UK government confirms plans for compulsory mediation for small claims in the County Court
• Court of Appeal provides guidance as to when court may refuse to accept party’s undertakings as part of settlement
• Supreme Court clarifies when a stay of court proceedings will be granted in favour of arbitration under s.9 Arbitration Act 1996
• High Court rules on common law enforceability of foreign judgment in E&W
• Trilogy of decisions shows English courts’ approach to granting anti-suit injunctions in support of foreign-seated arbitrations

Other Significant Developments

• Failure to prevent fraud – an introduction to the proposed new offence
• Retained EU Law: no sweeping sunset at the end of the year
• The end of the road for USD LIBOR?
• 2023 Global Bank Review – Trust Matters

We hope you find our update useful and, as ever, please feel free to contact your usual Herbert Smith Freehills contact if there are any topics that you would like to discuss further.