Bird & Bird client Property Alliance Group (PAG) has lost in the Court of Appeal over a circa £20m Libor manipulation claim against The Royal Bank of Scotland (RBS) and is currently weighing up whether to appeal the decision.
PAG alleged in the claim, which was brought in 2013, that it had been mis-sold four interest-rate swaps for three months Libor. The company argued that the swaps were mis-sold on the basis of implied representation, given previous findings of Libor manipulation against RBS.
However, the court ruled that any alleged misrepresentation should be limited to the currency of the swap. As PAG had dealt in sterling with RBS, the bank’s previous misconduct in Swiss franc and Japanese yen was irrelevant.
Bird & Bird partner Michael Brown, who led the claim, told Legal Business that the odds of taking this case to appeal are long. ‘The Court of Appeal refused to give us permission, so if the client wants to go forward we will need permission to appeal from the Supreme Court itself.’
However, the case has opened up the possibility of other damages claims, due to the court finding there was an implied representation by RBS that it was not manipulating sterling Libor. ‘The outcome from PAG is broadly positive for potential claimants, who have suffered losses arising from “out of the money” swaps with Libor panel banks, who have been found by the Financial Conduct Authority to have manipulated Libor,’ said Richard East, London co-managing partner for Quinn Emanuel Urquhart & Sullivan. ‘The banks will regard the Court of Appeal’s finding on implied Libor representation as deeply troubling, as it will almost certainly lead to new claims and some old claims coming alive again.’
Bird & Bird instructed Brick Court Chambers’ Tim Lord QC and Ben Woolgar, and XXIV Old Buildings’ Adam Cloherty. RBS was advised by Dentons, who instructed Fountain Court Chambers’ Richard Handyside QC and Adam Sher in addition to Maitland Chambers’ Laurie Brock.