Banking Litigation cases to watch in 2019
There are a number of high profile banking cases coming to the High Court and appellate courts later this year. Here is our summary of a few key cases to keep an eye out for.
Before getting into hearings taking place in 2019, there are a number of interesting hearings from 2018 in which decisions are expected in 2019:
Dunbar Assets plc v Julie Anne Davey
High Court judgment awaited on non-party costs application
Following judgment in their favour, Dunbar applied for a non-party costs order against a Bermuda-domiciled litigation funder. The amount claimed by Dunbar exceeded the ‘Arkin Cap’ – namely, the amount of funding provided by the funders. The judgment in Arkin v Borchard Lines Ltd suggested that the extent of funders’ liability should be limited to the extent of the funding they have provided. Dunbar seek to persuade the Court that the Arkin Cap should not apply to their claim. If successful this would be a significant decision enabling defendants to recover a greater proportion of their costs from litigation funders.
National Bank Trust v Ilya Yurov and others
High Court judgment expected
This $830 million fraud claim is pursued by the new owners of one of Russia’s largest banks, which had previously been the recipient of a $1 billion bailout, against three former shareholders and directors and their wives. It is alleged that the shareholders used the bank’s money to fund loans to their own business ventures, and deliberately concealed the loans from the bank. Trial commenced on 3 December 2018.
N v Royal Bank of Scotland and National Crime Agency
High Court hearing commenced on 28 January 2019
Claimant ‘N’ is an authorised payment institution which held business accounts with RBS. RBS developed money laundering concerns in respect of N and as a result froze N’s accounts and terminated their banking relationship. N has brought breach of contract and negligence claims against RBS seeking damages for losses incurred.
The NCA is an interested party to this claim given the tension between the Proceeds of Crime Act 2000 (POCA) and the contractual obligations that banks owe to their customers. This tension saw the same parties before the Court of Appeal in 2017 where the NCA successfully appealed interim orders made by the High Court requiring RBS to carry out certain past payment instructions given by N despite the NCA not having given consent to such payments under POCA (see  EWCA Civ 253).
The Federal Republic of Nigeria v JP Morgan Chase Bank NA
High Court judgment awaited on JPMC summary judgment application
The Federal Republic of Nigeria (FRN) has brought a claim against JP Morgan Chase (JPMC) seeking more than $1 billion in connection with an allegedly fraudulent and corrupt scheme to sell the rights to an east Nigerian oilfield to a consortium of Shell and Italian energy businesses.
The FRN is arguing that JPMC breached an alleged “Quincecare” duty (so named following the High Court decision in Barclays Bank plc v Quincecare Ltd in 1988), requiring banks to refuse to execute payment instructions without proper inquiry where it has reasonable grounds to suspect that they may amount to a fraud against its customer.
JPMC’s application for summary judgment and/or strike out was heard in early February and judgment is now awaited. In its application, JPMC contends that no such ‘Quincecare’ duty existed in respect of the relevant account/relationship, and the claim must therefore fail.
Walter Hugh Merricks CBE v Mastercard Incorporated and others
Court of Appeal judgment awaited
Mr Merricks is seeking to appeal the January 2017 decision of the Competition Appeal Tribunal to reject an application for a collective proceedings order against Mastercard, which would have allowed Mr Merricks to act as the representative for some 46.2 million UK consumers on an ‘opt-out’ basis in a claim valued at £14 billion. These proceedings follow a wave of litigation brought by retailers against Mastercard over interchange fees relating to credit and debit card transactions, which allegedly were anti-competitive and resulted in overcharging of consumers. The Court of Appeal hearing took place on 5 and 6 February and now judgment is awaited.
HEARINGS LISTED / EXPECTED
Netherlands v Deutsche Bank
Court of Appeal hearing listed for 2 April 2019
The Netherlands entered into a series of derivatives transactions with Deutsche Bank under an English law governed 1992 ISDA Master Agreement and Credit Support Annex (CSA). Under the CSA, Deutsche Bank was required to provide collateral to the Netherlands to cover credit risk. The CSA required the Netherlands to pay interest on the collateral held. However, the contractually agreed interest rate turned negative in 2014 so the Court was asked to determine whether Deutsche Bank should be required to pay ‘negative interest’ to the Netherlands. In July 2018 the High Court confirmed that Deutsche Bank was not obliged to pay negative interest. The Netherlands is seeking to appeal that decision.
BNP Paribas SA v Trattamento Rifiuti Metropolitani SPA
Court of Appeal hearing listed for 9 and 10 April 2019
A syndicate of banks led by BNP Paribas entered into an Italian law Finance Agreement with TRM. The parties also entered into an English law 1992 ISDA Master Agreement and an interest rate swap transaction under that Master Agreement. BNP Paribas commenced proceedings in London seeking various declarations in relation to TRM's obligations under the swap and the Master Agreement. TRM commenced proceedings in Turin and objected to the jurisdiction of the English court. In 2018 the High Court held that it had jurisdiction to hear the dispute on the basis that the declarations sought by BNP Paribas were derived from the swap and the ISDA Master Agreement. TRM is appealing on the basis that the Italian proceedings should form part of the English Court’s analysis of whether the declarations sought fell within the Master Agreement’s jurisdiction clause.
Deutsche Bank AG v Unitech Global Ltd
High Court hearing listed for 15 April 2019
Deutsche Bank is the claimant in two actions against Unitech, an Indian-based real estate business. These are debt claims for monies due under a credit facility and an interest rate swap. Unitech had previously counterclaimed alleging that Deutsche Bank mis-sold the swap and made misrepresentations regarding LIBOR. Deutsche Bank, however, successfully applied to have Unitech’s counterclaim struck out in June 2018. Although Deutsche Bank’s two actions remain separate, the Court has ordered that there be a joint trial and that evidence in one action shall stand in the other.
High Commissioner for Pakistan in the UK v NatWest Bank Plc
High Court hearing listed for 4 June 2019
In September 1948 £1 million was transferred to the High Commissioner for Pakistan in the United Kingdom from the seventh Nizam of Hyderabad. The transfer occurred during a short military campaign that saw India annex the region of Hyderabad. Asserting that the transfer was made without his authority, the seventh Nizam commenced proceedings against the High Commissioner for Pakistan in July 1954, but those proceedings were blocked by a sovereign immunity plea upheld in the House of Lords which concluded that the matter must be stayed until Pakistan itself elected to sue the bank. The proceedings remained stayed until June 2013 when Pakistan took just that course and issued proceedings against the Bank. The fund is now worth in excess of £35,000,000 and multiple parties have now joined and are asserting beneficial title. A trial of the substantive merits will finally be held in June 2019.
Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd
Supreme Court hearing listed to start by or before July 2019
The High Court and the Court of Appeal have held that Daiwa is liable in negligence to Singularis for having breached its duty of care, by paying monies out of its client account on the instruction of one of Singularis' directors and its only shareholder, Mr Al Sanea. The bank has appealed to the Supreme Court, which will have the opportunity to consider the scope of the duties imposed upon financial institutions to check the origin of and authority for payment instructions in the context of the potential for financial crime.
(1) PCP Capital Partners LLP & (2) PCP International Finance Limited v Barclays Bank Plc
High Court hearing listed for 1 October 2019
PCP claims damages in excess of £700 million from Barclays alleging deceit in connection with its arrangements with Qatar during two emergency fundraisings in 2008 worth a total of £11.8 billion. The trial of this matter was originally listed for January 2018 but was postponed to protect the integrity of related criminal proceedings in connection with the Serious Fraud Office’s investigation into Barclays’ operations in Qatar. The matter is now scheduled to finally come to trial in October 2019.