Issue 8 - Editor notes

Banking and finance disputes review

Issue 8

Publication July 2016

From the editor

In this edition of the Banking and finance disputes review, we explore the approach of different jurisdictions to the regulation of banks and their liability to investors and customers. Similar sets of facts raising similar sets of issues arise at varying times in different countries. Comparison of the approach taken by court and regulators suggests how these issues may develop in the future.

Two of our articles compare experiences in the United States and Europe. In Financial institution crime insurance claims: experience from the US, we gain valuable insight into issues that may arise in the European banking industry by studying recent American experience. In Iran sanctions update: Guidance for financial institutions, we explore the approach taken by the European and American authorities to recent changes in the Iran sanctions regime.

The scope of the obligation of a bank to give information to investors has been the subject of litigation in England and across Europe. The German approach is investigated in Swap transactions: The scope of German banks’ information obligations. The crucial question of where investors in the capital markets are able to institute proceedings against issuing and arranging banks is considered in our casenote on Profit Investment v Ossi (Case C-366/13).

Moving to other areas of regulation and liability relevant to banks, the growing maturity of the French market abuse regime is demonstrated in Double jeopardy for market abuse in France. New regulation may sometimes be beneficial to banks - in The Impact of the EU Trade Secrets Directive on financial institutions we consider the coming European regime for protection of trade secrets. Another change that may affect banks is the new approach to judicial oversight of penalties by the English courts, as described in Genuine pre-estimate and legitimate interests: penalty clauses and financial institutions.

An increase in activism by bondholders, for some years a feature of the United States capital markets, has led to litigation in England on thorny questions of contractual interpretation. In A brave new world of noteholder litigation, we examine an important set of arguments deployed by capital markets investors. A recent decision on a contractual interpretation dispute between a bank issuer and retail investors is considered in Supreme Court confirms approach to construction of bond documents. Our casenote on Canary Wharf v Deutsche Trustee [2016] EWHC 100 also deals with a contractual interpretation dispute between arranger and investors. A battle over whether the law applicable to a sale of bonds was English or New York was the key issue described in our casenote on Molton v Shooters Hill [2015] EWHC 3419.

Extensive freezing orders with potential cross-border effect are a distinctive feature of remedies granted by the English courts. Our casenote on JSC BTA Bank v Ablyazov [2015] UKSC 64 considers the scope of these freezing orders and their applicability to loans.

Finally, please note that these articles were all written before the UK’s vote on 23 June to leave the European Union. While it is too early to say anything concrete about how this might affect banking disputes in the UK and elsewhere, for our legal analysis of these fast-moving events, see our Brexit website and in particular Brexit blog – what next?

 Financial Institution Crime Insurance Claims: Experience from the US  Guidance for financial institutions  Swap Transactions: The Scope of German Banks’ Information Obligations   Double jeopardy for market abuse in France   The Impact of the EU Trade Secrets Directive on financial institutions   Genuine Pre-Estimate and Legitimate Interests: Penalty Clauses and Financial Institutions   A brave new world of noteholder litigation   Supreme Court confirms approach to construction of bond documents


Banking and finance casenotes

 Profit Investment Sim SpA v Ossi  Canary Wharf v Deutsche Trustee   Molton Street v Shooters Hill   BTA v Ablyazov


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