Biannual Banking Litigation Update (Spring 2024)

Welcome to the Spring 2024 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.

Read the full Banking Litigation Update here.

We have also recorded a short video to provide a high-level overview of developments during this period, which you can access here:

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

Duties in financial services

• High Court refuses to strike out negligence claim despite contractual disclaimer
• Carillion director disqualification proceedings – Insolvency Service drops proceedings against non-executive directors in so-called “test case”
• High Court finds that lender suffered no loss despite negligent valuation of security
• High Court confirms that conscious “awareness” of a representation is an essential (and distinct) element to a claim for misrepresentation
• Supreme Court confirms key elements of claim in knowing receipt in failed claim against bank
• High Court considers novel APP fraud “retrieval duty” claim against both sending and receiving PSPs
• On the hook – Who pays when customers are scammed

ESG

• Court of Appeal rejects second major attempt at a climate-related derivative action
• Supply chain risk: England not appropriate forum for ESG-related claims against Dyson relating to actions of Malaysian manufacturer
• High Court refuses permission for climate change judicial review against the FCA for a second time
• Climate disputes series

Impact of sanctions on financial services agreements

• New UK guidance following Mints decision on ownership and control
• High Court refuses interim payment application in Russian sanctions-related litigation
• High Court dismisses force majeure and trade sanctions defences in breach of contract claim, and considers “ownership and control” test under UK sanctions
• High Court confirms debtor must prove illegality where payment withheld as a result of sanctions
• High Court orders payment into court by Russian claimant as security for defendant banks’ costs in context of sanctions case
• Implications of sanctions against Russia on banking disputes in the UK

Securities litigation and class actions

• CPR 19.8 representative action: “bifurcated process” adopted in claim by bank against representative defendant
• High Court strikes out novel bid to bring securities class action using CPR 19.8 representative action as “opt-in” procedure
• UK listing regime reform: update on potential impact on securities litigation
• Court of Appeal allows secret commissions claim to proceed as representative action on “opt out” basis
• Competition collective proceedings: broad right of appeal and no general prohibition on communications between defendants and class members
• Representative actions under CPR 19.8: High Court to consider important questions relating to funding and damages for class members

ISDA

• Court of Appeal overturns High Court’s high-profile Italian swaps decision

Costs and funding

• Regime of fixed recoverable costs now in force for claims up to £100,000
• Litigation funding agreement may be enforceable in part despite Paccar decision: High Court finds there is “serious issue to be tried”
• Litigation funders not required to fortify cross-undertakings in dispute over enforceability of funding agreement
• Revised litigation funding agreement approved for opt-out competition claim: fee based on multiple of funding was not a DBA
• Competition Appeal Tribunal finds funding agreement based on multiple not a DBA, despite express cap by reference to proceeds
• High Court grants broad disclosure in support of non-party costs application against director / funders
• Litigation funding: Bill introduced to reverse effect of Paccar and Civil Justice Council invited to review the sector

Disclosure and privilege

• Redactions for privilege, irrelevance and public interest immunity, and waiver of privilege: High Court provides guidance
• Privy Council considers Norwich Pharmacal and Bankers Trust disclosure orders against banks
• Company not ordered to disclose privileged documents to shareholders in context of late application in securities class action
• Collateral use of disclosed documents: High Court declines to restrict use of documents referred to at public hearing
• High Court refuses Norwich Pharmacal disclosure order in aid of foreign proceedings
• Court of Appeal decision on litigation privilege for non-parties, legal advice privilege for investigations, and the iniquity exception
• Without prejudice rule: High Court emphasises narrow scope of exceptions
• Collateral waiver of privilege: High Court finds disclosure of chronology prepared by lawyer results in broader waiver

Governing law and jurisdiction

• High Court grants anti-suit and anti-anti-suit injunctions to restrain Russian proceedings brought by sanctioned parties
• UK signs Hague Judgments Convention 2019: a further step toward facilitating the international enforcement of English judgments
• High Court refuses Swiss bank’s jurisdiction challenge over declarations of enforceability of standby letters of credit
• Anti-suit injunctions in respect of Russian proceedings: English Court of Appeal applies Enka v Chubb and allows the final anti-suit injunction in the RusChemAlliance trilogy
• Anti-suit injunctions: High Court considers proper approach where facts relevant to jurisdiction disputed
• Procedure for challenging jurisdiction includes challenges based on validity of service, not just international jurisdiction
• High Court considers interpretation of English exclusive jurisdiction clause in trade finance documentation

Procedural developments

• Courts can compel parties to engage in ADR: Court of Appeal finds comments to the contrary in Halsey not binding
• Supreme Court finds court must generally accept uncontroverted expert evidence
• Supreme Court clarifies deliberate concealment gateway for postponing limitation
• High Court refuses customer’s interim mandatory injunction application to unfreeze bank account
• Proposed new rule would radically expand public access to court documents

Other significant developments

• Administrative Court emphasises contractual context in dismissing judicial review challenge to London Metal Exchange
• Court of Appeal refuses to strike out unfair prejudice petition seeking relief in favour of the company
• Supreme Court considers principles relating to remoteness in the tort of negligence
• Digital assets: Law Commission consults on private international law issues and draft legislation recognising a third category of personal property rights

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.