In the context of a claim by a sovereign wealth fund against a bank (and others) in relation to a derivatives investment, the High Court has allowed the defendant bank’s application for reverse summary judgment, finding that the fund’s claim was statute-barred and had no realistic prospect of extending the limitation period under section 32 of the Limitation Act 1980 (LA 1980): Libyan Investment Authority v Credit Suisse International & Ors  EWHC 2684 (Comm).
This is the latest in a series of decisions in recent months, in which the court has adopted a robust approach and summarily dismissed a statute-barred claim where it fails to satisfy the requirements of section 32 LA 1980: see in particular European Real Estate Debt Fund v Treon  EWHC 2866 (Ch) (read our blog post) and ECU Group plc v HSBC Bank plc & Ors  EWHC 2875 (Comm) (read our blog post). As a reminder, under section 32 LA 1980, the statutory limitation period can be postponed/extended in the event that the action is based on the fraud of the defendant, where the claimant could not have discovered the fraud with “reasonable diligence” before the expiry of the limitation period.
In all three cases, the claims were brought out of time and the claimants sought to rely on section 32 LA 1980 to postpone the statutory limitation period. All of the claims were dismissed for failing to meet the requirements under this section, and in each case, the court’s analysis turned on the question as to what “reasonable diligence” requires. This question is assessed by the court in two distinct stages: (i) whether there is anything to put the claimant on notice of a need to investigate; and (ii) what a reasonably diligent investigation would then reveal. In each case, the court was strongly of the view that it expected the claimants to be proactive, especially where they have the resources to do so, in investigating any suspicion of fraud or concealment, whether that would be through routine due diligence, issuing proceedings, or making an application for pre-action disclosure.
In the present case, the court commented that had the fund acted with reasonable diligence to make enquiries of a third party intermediary, it could have discovered a key piece of information that was necessary for it to plead its claim against the bank and the other defendants. The court was satisfied that the bank (and other defendants) had shown to the requisite standard that by no later than the end of July 2012, a party in the position of the fund ought to have been on notice of the need to make enquiries as to the involvement of a third party intermediary in relation to the derivatives investment.
Accordingly, the court found in favour of the bank (and other defendants) and allowed the summary judgment application. The claim was therefore dismissed.