Banking Disputes Quarterly

Q4 2015

Litigation Update

Welcome to the Q4 2015 edition of our Banking Disputes Quarterly, designed to keep you up to date with the latest news and legal developments and to inform you about future developments that may affect your practice.

In this issue

  • Senior women in financial services - How to address the problem of gender imbalance
    19 JAN 2016

    Many financial services firms employ more women than men in junior roles. But analysis shows that the chances of women progressing from middle to senior management roles are worse in the financial services industry than in any other sector. The issue is not a new one but it is a significant problem which needs to be addressed as many talented women are choosing to leave the sector altogether.


    Recognising that problem earlier this year the government asked Jayne-Anne Gadhia, CEO of Virgin Money, to carry out a review of the representation of women in senior managerial roles in the UK’s financial services industry ('the Review') and to make recommendations. Her initial research shows that most progress has been made by those organisations which address the issue head-on and that progress can only be made if the right tone is set from the top.

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  • First trial in the financial list over validity of derivatives transactions draws to a close
    19 JAN 2016

    The trial of the first case to be heard in the new Financial List has finished and we await the judgment from Mr Justice Blair with interest. The case was transferred in the middle of October, shortly after the Financial List first became operational.

    The case, Banco Santander Totta v Companhia Carris De Ferro de Lisboa SA & Others, concerns the validity of nine derivative transactions entered into by four Portuguese public transport companies and Banco Santander Totta (the Bank). The transport companies have ended up paying interest at very high rates (up to 40%) under some of the swap agreements at a time when Euribor rates have been less than 1%.

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  • Revised draft pre-action protocol for debt claims out for consultation
    19 JAN 2016

    The Ministry of Justice is consulting on a revised draft Pre-action Protocol for Debt Claims (Debt Protocol) after an earlier version was lambasted by representatives of the credit industry as being totally disproportionate. The new version attempts to strike a more proportionate balance between the needs of creditors, debtors and debt advisors.

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  • A word of caution: does your prepayment indemnity clause work?
    19 JAN 2016

    An earlier version of this article first appeared in the December 2015 issue of Butterworths’ Journal of International Banking and Financial Law.

    The High Court decision in K/S Preston Street v Santander [2012] EWHC 1633 and the more recent decision in Barnett Waddington v RBS [2015] EWHC 2435 highlight the importance of careful drafting of prepayment indemnity clauses and the need to seek early legal advice when faced with customer challenges. Both cases concern the construction of prepayment indemnity clauses in fixed rate loan agreements. In each case, the borrowers wanted to prepay the loan early. The banks sought an indemnity for their costs/losses as a result of the early prepayment. The borrowers denied that the banks were entitled to recover any such costs/losses. 

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  • A new thorn in the side of claimants in swap mis-selling claims
    19 JAN 2016

    In December 2015 the High Court handed down its judgment in Thornbridge Limited v Barclays Bank PLC [2015] EWHC 3430 (QB), a swaps mis-selling claim involving an interest rate hedge. The customer lost on all counts. The judgment is helpful for banks facing similar claims in that it demonstrates that, even if there are concerns that a bank may have strayed into the territory of giving advice, the court will consider the relationship as a whole and will distinguish between a salesperson explaining the product they want to sell and advising on which product to take. 

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  • Court of Appeal overturns decision in Titan 2006-3 v Colliers in finding that valuer in CMBS structure was not negligent
    19 JAN 2016

    In the last edition of Banking Disputes Quarterly, we reported that the Court of Appeal was due to consider the Commercial Court's ruling in Titan Europe 2006-3 plc v Colliers International UK plc [2015] EWCA Civ 1083. The first instance decision was significant as it was the first analysis by an English Court as to whether the SPV issuer of commercial mortgage-backed securities (CMBS) or the noteholders of the securities was the appropriate claimant to pursue a negligence claim against the valuers of the underlying commercial property.  On the facts of this case, the Commercial Court found that the issuer could bring the claim, that the valuer had indeed been negligent, and awarded damages to the issuer. The Court of Appeal has now overturned that decision on the facts, but has confirmed the principle that an issuer may bring a claim in negligence against the valuer in the context of a CMBS structure.

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  • Supreme Court clarifies scope of freezing orders in context of loans
    19 JAN 2016

    In the long-running saga of JSC BTA Bank's claims against its former chairman and majority shareholder, Mukhtar Ablyazov, the Supreme Court recently handed down a judgment clarifying the scope of the standard form freezing order. In JSC BTA Bank v Ablyazov [2015] UKSC 64 the Supreme Court considered in particular the meaning of 'asset' under the terms of a freezing order granted in 2009 against Mr Ablyazov, and whether by instructing his lenders to pay the proceeds of certain loan agreements to his lawyers, co-defendants and other recipients, Mr Ablyazov had breached the terms of the freezing order. The Supreme Court partially overturned the decision of the Court of Appeal, holding that the proceeds of these loan agreements were indeed 'assets' on the basis that the respondent had the power to directly or indirectly dispose of, or deal with those proceeds as if they were his own, and that Mr Ablyazov had therefore breached the freezing order.

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