Banking & Finance Archives - EURO LIT INSIGHTS

Arbitration Agreements No Longer a Get-Out-of-Jail-Free Card for Insolvent Debtors: A Farewell to Salford Estates

by Campbell Herbert | Jul 2, 2024 | Arbitration, Court Judgment, Banking & Finance, United Kingdom

The Judicial Committee of the Privy Council has decisively redrawn the boundaries between arbitration agreements and insolvency proceedings in the case of Sian Participation Corp (In Liquidation) v Halimeda International Ltd.[1]

At its core, this case represents a clash between the long-established public policy of insolvency law, which aims to efficiently wind-up insolvent companies for the benefit of all creditors, and the now firmly entrenched policy that those who agree to arbitrate their disputes should be held to that bargain. For years, these two heavyweights have fought, neither quite landing a knockout blow. Now, the Privy Council has stepped in to declare a winner.

Prequel: The Rise and Fall of Salford Estates

In 2014’s Salford Estates (No 2) Ltd v Altomart Ltd,[2] the English Court of Appeal determined winding-up petitions generally should not be granted where the underlying debt was subject to an arbitration agreement, even where that debt wasn’t genuinely disputed. This handed debtors a powerful shield against liquidation.

While adopted in many common law jurisdictions, the Salford Estates approach was not followed in the British Virgin Islands, where Sian Participation v Halimeda International arose. Fast-forward to 2024, and the Privy Council has now carefully

High Court Issues First Judgment on Quincecare Duty After Landmark Supreme Court Ruling

by Jack Thorne and Harry Denlegh-Maxwell | Mar 27, 2024 | Banking & Finance, United Kingdom

The so-called Quincecare duty has come under consideration for the first time since the Supreme Court’s ruling in Philipp v Barclays Bank UK plc[1] in July 2023.

As we set out in our article here, the ruling in Philipp was widely seen as a welcome clarification of the scope of the Quincecare duty owed by financial institutions, particularly as the level of online fraud continues to soar. This most recent judgment, handed down on 14 March 2024, suggests that, following the ruling in Philipp, focus will turn to the adequacy of a bank’s efforts to recover funds from second and third generation recipients.

The decision

In CCP Graduate School Ltd v National Westminster Bank Plc and Santander UK Plc[2], CCP Graduate School Ltd (CCP) claimed that it had been the victim of an “authorized push payment” (APP) fraud. CCP argued that criminal actors fraudulently induced it to transfer money from its account with National Westminster Bank Plc (NatWest) to an account held with Santander UK Plc (Santander). CCP argued that, at the time the payments were made, and unbeknownst to CCP, the Santander account was under the control of the criminal actors.

CCP

English Courts Assert Jurisdiction to Grant Anti-Suit Relief in Landmark Case

by Campbell Herbert | Mar 5, 2024 | Court Judgment, Banking & Finance, Oil & Gas, United Kingdom

In a ground-breaking ruling, the Court of Appeal has confirmed that English courts have the authority to issue final anti-suit injunctions in support of arbitration agreements governed by English law, even when the seat of the arbitration is outside of England. The landmark judgment in Unicredit Bank GmbH v Ruschemalliance LLC [2024] EWCA Civ 64, which follows three earlier lower court decisions arising on substantially the same fact[1], reinforces the robust protection of arbitration rights under English law and solidifies the position of English courts as a bastion for arbitration.

Background

The dispute revolved around Italian bank UniCredit, which, along with Deutsche Bank and Commerzbank, issued performance bonds in favour of RusChemAlliance (RCA), a Russian operator of an LNG facility in the Leningrad Oblast, in relation to construction contracts between RCA and German engineering contractors. These bonds were governed by English law and provided for arbitration in Paris under the ICC rules.

Following Russia’s invasion of Ukraine in February 2022 and the subsequent imposition of wide-ranging EU sanctions, the German companies halted work under the construction contracts after receiving confirmation from German authorities that they deemed such work to be prohibited under Regulation (EU) 833/2014. RCA terminated the

Deutsche Bank Anti-Suit Injunction

by Romilly Holland and Sadaat Cheema | Oct 21, 2023 | Arbitration, Court Judgment, Banking & Finance, United Kingdom

The recent decision of the Court of Appeal (the Court) in Deutsche Bank v Ruschemalliance LLC [2023] EWCA Civ 1144 (Deutsche Bank) confirms the strong interest in favour of granting anti-suit relief to hold parties to their arbitration agreements, even where the seat of arbitration is in a jurisdiction that does not itself provide for anti-suit injunctions (ASIs). In this case, anti-suit relief against proceedings issued in Russia was granted in circumstances where the relevant contract contained an agreement to arbitrate disputes in Paris. The Court considered that England was the proper forum for the anti-suit application, and that an anti-suit injunction was appropriate, because French courts do not grant ASIs.

The case is timely as it comes against the backdrop of a number of disputes about forum and choice of law in the wake of the Russian invasion of Ukraine. Agreements have increasingly broken down following implementation of US and European sanctions. There have been a number of consequential disputes over where to litigate – in Russia (as the Russian entity may prefer) or according to the contract’s specified forum. Paris is one of the most popular ‘neutral’ forums for dispute resolution, including in contracts with Russian counterparties. However, if

The Quincecare Duty: A Victory for the Banks?

by Harry Denlegh-Maxwell | Jul 12, 2023 | Court Judgment, Banking & Finance, United Kingdom

On July 12, 2023, the UK Supreme Court delivered a landmark decision on the so-called “Quincecare duty” owed by banks to their customers.

In a unanimous judgment in favour of Barclays Bank, the UK’s highest Court held that banks did not owe customers a duty of care in fraud cases where transactions were authorised by the customers directly. As Lord Leggatt said in his judgment: “It is not for the bank to concern itself with the wisdom or risks of its customer’s payment decisions”.

This important clarification will be welcomed by financial institutions, particularly as the level of online fraud continues to soar. However, there are a number of other claims that are currently before the courts that will still be watched with interest, as will this present case as it is remitted to the High Court to decide arguments about the scope of any duty to attempt to claw back payments once a fraud has come to light.

The Supreme Court’s decision also follows the recent passing of the Financial Services and Markets Act 2023, which provides for a mandatory reimbursement scheme, albeit limited to certain payment types within the United Kingdom. In practical terms, therefore, claimants may look