BANKING LITIGATION PODCAST EPISODE 11: MONTHLY UPDATE – OCTOBER 2019

Earlier this month, we launched a brand new podcast channel. Our latest monthly update podcast is now live on that channel. In the podcast, we look at key recent judgments likely to be of interest to financial institutions.

Also listen on Apple or Spotify.

You can subscribe to the podcast channel here to listen to our regular bite-sized broadcasts covering both litigation and regulatory developments for banks and other financial institutions.

You can find links to our blog posts on the cases covered in the latest podcast below:

John Corrie
John Corrie
Partner
+44 20 7466 2763
Ceri Morgan
Ceri Morgan
Professional Support Lawyer
+44 20 7466 2948
Mark Tanner
Mark Tanner
Senior Associate
+44 20 7466 2412

Biannual Banking Litigation Update: April 2019 – October 2019

Welcome to our latest Banking Litigation Update, in which we highlight a number of the most important cases and developments affecting UK financial institutions over the past six months.

During this period, there have been a considerable number of judgments relating to the contractual interpretation of financial services agreements. While the legal principles of contractual construction are well-established, this continues to be an area in which disputes are ripe in the financial services sector (and beyond), with many cases progressing to appellate level. Perhaps this is because rival interpretations are often both arguable, but with commercial outcomes which are starkly opposed. In particular, the courts have considered a number of key decisions looking at the role of the contract in circumstances where there has been suspicion of criminal activity. For example, the contractual discretion of a bank to close a customer account without notice where there is suspicion of money laundering (N v RBS); and the right of a borrower to withhold payment under a facility agreement where there is a risk of US “secondary” sanctions (Lamesa v Cynergy). You can read more about these cases by following the link to the Banking Litigation Update below.

A cause of action which has received significant judicial scrutiny recently is the so-called Quincecare duty of care. This is the duty imposed on a bank where it has reasonable grounds (although not necessarily proof) for believing that a payment mandate by an authorised signatory of its customer is an attempt to misappropriate the funds of its customer. The duty relates to what a bank must/must not do in such circumstances. A case considering whether the defence of illegality can respond to a claim for breach of the Quincecare duty has gone all the way to the Supreme Court and judgment is expected this week (Singularis v Daiwa). In another case, the Court of Appeal has found that the express terms of a depository agreement did not exclude the duty and were not inconsistent with its imposition (JPMorgan v Nigeria). Until a couple of years ago, these arguments had only reached trial in a couple of cases since the early 1990s (when the Quincecare duty was established). Banks looking at the way they respond to payment requests which arouse suspicion would be wise to keep abreast of the judicial clarification which is continuing to evolve in this area.

An important regulatory development to be aware of is the latest EU Prospectus Regulation (EU/2017/1129), which is now in full force and effect and represents the most significant overhaul of European securities law since the Prospectus Directive came into force in 2005. The changes introduced will have a direct impact on securities litigation claims, which we have explored in our blog post: What securities litigators need to know about the new Prospectus Regulation.

Looking to the future, the biggest risk area (aside from Brexit) continues to be the discontinuation of LIBOR (and other IBORs) from 2021. IBOR transition teams across the globe are currently grappling with the difficulties posed by transition from IBOR benchmark rates to risk free rate alternatives. However, given the prevalence of IBORs as interest rate benchmarks in contracts across multiple markets and jurisdictions, the demise of IBORs raises questions about the litigation risks which parties to such contracts may face. In our last Banking Litigation Update, we referred you to our article in the Journal of International Banking Law and Regulation: LIBOR is being overtaken: Will it be a car crash? (2019) 34 J.I.B.L.R.. Since then, the FCA and PRA have published a joint statement setting out their observations from the responses of major banks and insurers in the UK to the Dear CEO letters last year (which asked for details of LIBOR preparedness). This joint statement highlighted that there is real divergence across the market, which we have considered in further detail in our blog post: LIBOR discontinuation – FCA thematic feedback on responses to Dear CEO letter.

In the past few months, we have launched two new products, aimed at keeping in-house lawyers at banks up to date with the latest banking litigation developments. In June 2019, we launched a new banking litigation blog, to which you can subscribe to receive email updates on the latest cases as soon as they are published. Earlier this month, and following the success of our banking litigation podcast series, we also launched a new podcast channel dedicated to financial services litigation and regulation. The purpose of the channel is to make it easy for our clients to subscribe for podcast updates which are specifically relevant to them. You can subscribe for the new channel here.

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

Read our full Banking Litigation Update.

 

Rupert Lewis
Rupert Lewis
Partner
+44 20 7466 2517
Chris Bushell
Chris Bushell
Partner
+44 20 7466 2187
Ceri Morgan
Ceri Morgan
Professional Support Lawyer
+44 20 7466 2948

HERBERT SMITH FREEHILLS LAUNCHES NEW PODCAST CHANNEL DEDICATED TO FINANCIAL SERVICES LITIGATION AND REGULATION

We are delighted to announce the launch of a brand new podcast channel to provide regular bite-sized broadcasts covering both litigation and regulatory developments for banks and other financial institutions. You can subscribe for the new channel here (we suggest doing this from your mobile device so you can select your preferred app for listening to podcasts, e.g. Apple, Spotify etc.).

This follows the success of our banking litigation podcast series launched earlier this year, which has become popular with in-house lawyers looking for a convenient and time-efficient way to keep on top of rapidly changing developments. The series takes the form of a monthly episode on key developments of interest to the industry, and also special editions on hot topics (for example, the litigation risks arising from LIBOR discontinuance). You can access the back-catalogue of podcasts through the subscription link above or on our banking litigation blog. The platform will be further enhanced by our FSR team who will soon release their own podcast series, providing frequent regulatory insights in the financial services sector.

The launch coincides with the release of the 10th episode of the banking litigation podcast series, which can be downloaded on all the usual platforms: BuzzsproutApple and Spotify. This edition is a monthly update podcast, looking at key recent judgments likely to be of interest to financial institutions. You can find links to our blog posts on the cases covered in this podcast below:

We encourage you to subscribe to the blog to receive posts as soon as they are published.

Rupert Lewis
Rupert Lewis
Partner, Head of Banking Litigation
+44 20 7466 2517
Hywel Jenkins
Hywel Jenkins
Partner, Head of Financial Services Regulatory (UK)
+44 20 7466 2510
John Corrie
John Corrie
Partner
+44 20 7466 2763
Ceri Morgan
Ceri Morgan
Professional Support Lawyer
+44 20 7466 2948

BANKING LITIGATION PODCAST EPISODE 10: MONTHLY UPDATE – SEPTEMBER 2019

In our monthly update podcast, we look at key recent judgments likely to be of interest to financial institutions.


Also listen on Apple or Spotify.

You can find links to our blog posts on the cases covered in this podcast below:

John Corrie
John Corrie
Partner
+44 20 7466 2763
Ceri Morgan
Ceri Morgan
Professional Support Lawyer
+44 20 7466 2948
Sousan Gorji
Sousan Gorji
Senior Associate
+44 20 7466 2750

Banking Litigation Podcast Episode 9: Monthly Update – August 2019

In our monthly update podcast, we look at key recent judgments likely to be of interest to financial institutions.

Also listen on Apple or Spotify.

You can find links to our blog posts on some of the cases covered in this podcast below:

 

Ceri Morgan
Ceri Morgan
Professional Support Lawyer
+44 20 7466 2948
Dan Eziefula
Dan Eziefula
Senior Associate
+44 20 7466 2182

Banking Litigation Podcast Episode 8: Monthly Update – July 2019

In our monthly update podcast, we look at key recent judgments likely to be of interest to financial institutions.

Also listen on Apple or Spotify.

You can find links to our blog posts on some of the cases covered in this podcast below:

John Corrie
John Corrie
Partner
+44 20 7466 2763
Ceri Morgan
Ceri Morgan
Professional Support Lawyer
+44 20 7466 2948

Herbert Smith Freehills contributes chapter to The Securities Litigation Review (5th Edition)

Herbert Smith Freehills have contributed the England and Wales chapter of The Securities Litigation Review. Now in its fifth edition, The Securities Litigation Review, edited by William Savitt of Wachtell, Lipton, Rosen & Katz, is a guided introduction to the class action regimes for securities claims in the key jurisdictions across the globe, providing a valuable resource for corporates and financial institutions who might face such claims. Partners from our Australian offices have also contributed.

Harry Edwards leads our class actions practice in the UK. Feel free to contact him to learn more about our team.

Download Chapter

Reproduced with permission from Law Business Research Ltd.This article was first published in July 2019. For further information please contact Nick.Barette@thelawreviews.co.uk.

Previous Editions:

4th edition, 2018

3rd edition, 2017

Harry Edwards
Harry Edwards
Partner
+44 20 7466 2221

Banking Litigation Podcast Episode 7: Monthly Update – June 2019

In our monthly update podcast, we look at key recent judgments likely to be of interest to financial institutions.

Also listen on Apple or Spotify.

You can find links to our blog posts on some of the cases covered in this podcast below:

Ceri Morgan
Ceri Morgan
Professional Support Lawyer
+44 20 7466 2948
Maryam Oghanna
Maryam Oghanna
Associate
+44 20 7466 2428

Banking Litigation Podcast Episode 6: Monthly Update – May 2019

In our monthly update podcast, we look at key recent judgments likely to be of interest to financial institutions.

Also listen on Apple or Spotify.

You can find links to our blog posts on some of the cases covered in this podcast below:

Ceri Morgan
Ceri Morgan
Professional Support Lawyer
+44 20 7466 2948
Scott Warin
Scott Warin
Associate
+44 20 7466 2479

Bi-annual Banking Litigation Update: October 2018 – April 2019

Welcome to our latest Banking Litigation Update, in which we highlight a number of the most important cases and developments affecting UK financial institutions over the past 6 months.

Privilege decisions have, as ever, dominated the legal development headlines. In our last update, we celebrated the return to the orthodox position on litigation privilege following the Court of Appeal’s decision in SFO v ENRC. However, the good news was short-lived and the trend of decisions continues to be towards a more narrow approach to privilege. The recent case of WH Holding, for example, is likely to lead to difficulties in practice for banks and other corporates discussing commercial proposals for the settlement of disputes at board level (which the Court of Appeal found were not covered by litigation privilege in this case).

On the other hand, the courts have adopted an increasingly broad interpretation of the compulsory disclosure powers exercisable by criminal/regulatory authorities (the KBRdecision is a good example). This highlights the significance of the High Court’s decision to order Tesco to disclose SFO documents in the civil action brought by its shareholders under s.90A of the Financial Services and Markets Act 2000 (“FSMA“). Those documents had been obtained by the SFO from third parties using its powers of compulsion and disclosed by the SFO to Tesco in the course of negotiating Tesco’s deferred prosecution agreement (“DPA“). From a civil litigation perspective, the increased reach of criminal/regulatory authorities to obtain documents may increase the scope of documents ultimately disclosable in civil proceedings. The combined effect of these judgments is therefore a developing area we are monitoring closely.

In the past 6 months we have noticed a decline in judgments relating to mis-selling/misrepresentation, although the High Court’s decision in Marme is notable – being the second civil court trial judgment considering IBOR manipulation (the first being PAG v RBS). Other significant decisions from the perspective of financial institutions include a High Court judgment on the calculation of Loss under the 1992 ISDA Master Agreement (once again arising out of the collapse of Lehman Brothers), and a Court of Appeal decision clarifying the “advice” vs “information” distinction when applying the SAAMCO principle, with the effect that losses flowing from market forces were outside the scope of the defendant professional adviser’s duty.

It would be remiss to publish an update at this time without mentioning Brexit, although to date there has been only one significant Brexit-related judgment with potential relevance in the banking litigation sector. That is the decision in Canary Wharf v European Medicines Agency, illustrating the uphill struggle that is likely to face a party seeking to establish that its contracts are frustrated as a result of the UK’s withdrawal from the EU. Amidst the ongoing uncertainties in relation to both the nature and timing of Brexit, we have published a new decision tree on enforcement of English judgments in the EU27 post-Brexit.

Looking to the future, in another area of uncertainty impacting financial institutions, we have been considering the fact that LIBOR (at least as we know it) will cease to exist from 2021. Given its prevalence as an interest rate benchmark in contracts across multiple markets and jurisdictions, its demise raises questions about the litigation risks which parties to such contracts may face. We have published a banking litigation e-bulletin on the types of litigation which may arise, and some of the legal arguments which might be deployed following LIBOR discontinuation, plus a more detailed article in the Journal of International Banking Law and Regulation: LIBOR is being overtaken: Will it be a car crash? (2019) 34 J.I.B.L.R.

To make it easier for our clients to keep on top of legal developments between e-bulletins, we have launched a banking litigation podcast. Each podcast is a bitesize (10-15 minutes) audio recording of key legal developments. It takes two main forms: (1) a monthly high level summary of key judgments, with a ‘deep dive’ into a particular case of interest (you can listen to our most recent monthly update on SoundCloudiTunes and Spotify); and (2) special edition podcasts focusing on a particular topic of interest in the sector. We have recently released our first special edition of the podcast series, in which the focus is on the litigation risks arising from LIBOR discontinuation (see previous paragraph). The episode is available to download on SoundCloudiTunes and Spotify.

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

Read our full Banking Litigation Update.

 

Rupert Lewis
Rupert Lewis
Partner
+44 20 7466 2517
Kirsten Massey
Kirsten Massey
Partner
+44 20 7466 2218
Ceri Morgan
Ceri Morgan
Professional Support Lawyer
+44 20 7466 2948