Litigants face an uphill battle

I think the Libor element was a tactical lever to get the bank’s senior execs into the witness box and force Barclays to settle – the bank was never going to allow cross-examination because of the potential adverse publicity (on top of three ex-Barclays employees being prosecuted by the SFO). And Graiseley Properties was probably happy to extract a favourable commercial settlement.

Interestingly, the case had been consolidated with another brought against Deutsche Bank by Unitech Global Ltd. Unitech was granted permission to run the Libor misrepresentation argument too. There is still a live case ‘in play’ to decide on swap mis-selling and the impact of Libor manipulation. To date, two claimants have taken swap claims to court but both have failed (Grant Estates in Scotland and
the Rowley case). The potential
for a claimant to set a favourable precedent on swaps and
Libor remains.

‘Unsophisticated’ customers are eligible for the Financial Conduct Authority review scheme. At the end of March, the FCA said that 18,800 customers had been invited to join the scheme with an 84 per cent uptake, of
which 94 per cent received non-compliant sales and about £600m has been paid in redress.

For those ‘unsophisticated’ customers who are not happy with the scheme’s findings in relation to consequential losses or ‘sophisticated’ customers who did not qualify for the scheme in the first place, the Deutsche Bank case will be of interest. This and Graiseley have shown other swap claimants which tactical tools are available to pressurise a bank.

However, the costs, risks and funding of litigation of this nature are the main barrier to further cases coming to light. It may be that a group/‘class action’ style case is taken up by a number of claimants acting together/in consortium to run the Libor point (the mis-selling angles would probably be too fact-sensitive to decide together).

Generally, it looks like an uphill battle for litigants. Rowley decided that the regulatory regime set
out in the FCA handbook does
not create a concurrent duty of care in negligence, which is a problem for companies and LLPs bringing claims as they cannot sue in the courts for breaches of handbook rules. SJ

Jonathan Kitchin is an associate at Michelmores