Court of Appeal to hear two LIBOR manipulation appeals
Banking lawyers will be closely watching the Court of Appeal this week as it hears two LIBOR manipulation appeals involving Barclays and Deutsche Bank.
However, a decision by the Court of Appeal last week in favour of the bank in the RBS interest rate swap case, Green and Rowley v RBS [2013] EWCA Civ 1197, gives bankers hope of a favourable outcome, according to City lawyer, Juliet Schalker, a partner at Rosling King.
The court dismissed the appeal of two Lancashire hoteliers, Rowley and Green, who claimed they were mis-sold interest rate swaps.
Schalker says the court found “that under reasonable circumstances banks are not responsible for customers understanding the nature of the risks involved when entering into a swap transaction.
“In light of this favourable judgment, no doubt Barclays Bank and Deutsche Bank will be hopeful for a positive outcome.”
She says the court will this week try to reconcile the decision in Graiseley Properties v Barclays Bank [2013] EWHC 37 (Comm), which “suggests there is an implied representation in loan agreements that a bank will not make false or misleading submissions which would then affect LIBOR”, with that of Deutsche Bank AG & Ors v Unitech Global Limited [2013] EWHC 2793 (Comm). In Deutsche, the court at first instance found in favour of the bank since it was unrealistic to allege that the bank had made a representation simply by being a LIBOR panel member. Schalker says: “In particular, the court held that an individual participating bank could not be held responsible for the overall integrity of the system.”
If Graisley is preferred, she says, it may pave the way for more claims against banks based on allegations that the bank sold LIBOR related products. If the Lords Justice prefer Deutsche, on the other hand, customers may find it difficult to bring LIBOR manipulation claims in future.
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