The following is a list of some recent UK judgments applicable to securities litigation. Click on the links for further details:

Class actions

  1. Court of Appeal revisits application for Collective Proceedings Order for £14bn Mastercard class action
  2. Competition Appeal Tribunal puts on hold two applications for Collective Proceedings Orders

Bond disputes

  1. Court of Appeal rejects arguments to imply terms into Eurobond
  2. High Court determines incentive fee not payable to CLO collateral manager
  3. High Court refuses declarations sought by trustee on the amounts due on unsecured notes

ISDA disputes

  1. Court provides guidance on limitation of discretion in calculation of loss under 1992 ISDA Master Agreement

Benchmark disputes

  1. Court dismisses misrepresentation claims in Euribor case


  1. Information gathering by in-house lawyer for external advice not necessarily privileged
  2. Commercial discussions on settlement proposal not necessarily privileged


  1. SFO’s powers to order documents have extraterritorial reach under Criminal Justice Act
  2. Court orders defendants to disclose third-party documents received from SFO

Collateral Use

  1. Retrospective permission for collateral use comes with a sting in the tail
  2. Court refuses permission to provide FBI with documents


Class actions

1. Mastercard collective action – Walter Merricks CBE v Mastercard [2019] EWCA Civ 674

In September 2016 Walter Merricks, as the prospective class representative, issued an application in the UK’s Competition Appeal Tribunal (CAT) to commence a collective action against Mastercard, arising from the European Commission decision in 2007 that Mastercard’s intra-EEA multilateral interchange fees infringed competition law.  The action was brought on behalf of all consumers based in the UK who, from the period 22 May 1992 to 21 June 2008, purchased goods and/or services from businesses selling in the UK that accepted MasterCard cards.

The action failed to achieve certification in the CAT in July 2017. Walter Merricks appealed that decision to the Court of Appeal (CoA), and a hearing was held in February 2019.

CoA Decision

On 16 April 2019, the CoA set aside the CAT’s order refusing certification, and the application for certification has now been remitted to the CAT for re-hearing. Certification has therefore not been approved, but will be reheard on certain issues.  The CoA denied Mastercard permission to appeal the judgment to the Supreme Court, and Mastercard have sought leave to appeal directly to the Supreme Court – the result of which will likely not be known until early Autumn 2019.

The CAT had dismissed the claim for two principal reasons, namely, (1) “a perceived lack of data to operate the proposed methodology for determining the level of pass-on of the overcharges to consumers” and (2) “the absence of any plausible means of calculating the loss of individual claimants so as to devise an appropriate method of distributing any aggregate award of damages”;

  1. Pass-onThe essential question for the CoA was whether the CAT had demanded too much of the proposed representative at the certification stage. The CAT took a strict approach to the evidential burden in respect of pass-on and refused to certify because it was unpersuaded that there was sufficient data available for the claimants’ proposed methodology (to establish pass-on to consumers) to be applied on a “sufficiently sound basis”.The Court of Appeal ruled that, at the certification stage, the proposed representative should not be required to demonstrate more than that he has a real prospect of success. The CoA’s view was that the CAT failed to apply this test.Instead, the CAT had carried out a mini-trial and had required the proposed representative to establish more than a reasonably arguable case.

    Further, the Court of Appeal held that, at the certification stage, it was not necessary for the proposed representative to be able to produce all the evidence and the data available to implement the methodology. The CoA added that the CAT was not prevented from terminating the CPO if it subsequently transpired that there is  insufficient data to enable the claimant’s expert’s pass-on analysis to be performed, but that such a decision would be more appropriate once the pleadings, disclosure and expert evidence are complete.

  2. Distribution of DamagesThe CAT stated that the proposed method of distributing any aggregate award of damages would bear no relation at all to the loss suffered by individual consumers, with some consumers potentially receiving more or less than they actually lost. The CoA concluded that the CAT had committed an error of law in relation to this issue as neither the Consumer Rights Act 2015, nor the CAT Rules 2015, require aggregate damages to be distributed on a compensatory basis of the kind envisaged by the CAT – “the vindication of the rights of individual claimants is achieved by the aggregate award itself”.The CoA held that distribution is a matter for the trial judge to consider once an aggregate award has been made. For certification purposes the CAT is not required to consider more than whether the claims are suitable for an aggregate award of damages, which by definition does not require an assessment of individual loss.


2. UK Trucks Claim Limited  v Fiat Chrysler Automobiles N.V et al and Road Haulage Association Limited v Man SE et al [2019] CAT 15

In May and July 2018 two respective applications were issued in the CAT to commence collective proceedings arising from the European Commission’s decision regarding the Truck cartel in 2016.

One of the applications was an ‘opt-in’ claim brought on behalf of numerous UK hauliers, the other an ‘opt-out’ claim brought on behalf all owners and lessees of trucks during the cartel period.

On 17 May 2019, the Competition Appeal tribunal adjourned the two applications in view of the uncertainty created by the Court of Appeal decision in the Mastercard case (see above) as to the correct certification tests in the nascent statutory regime governing CPOs.

The CAT decided that it was in the best interests of justice to adjourn the applications until either (i) the Supreme Court denies Mastercard’s application to appeal or (ii) until such time as the Supreme Court issues judgment on Mastercard’s appeal; “If we were to grant either, or both, CPOs applying the Court of Appeal test and if the Court of Appeal judgment was then reversed by the Supreme Court, it seems to us that we would have to hear argument on these applications again, no doubt formally on an application to revoke the CPOs.””

The CAT nevertheless proceeded with a three day hearing, commencing on 4 June 2019, as to the appropriateness of each of the proposed class representatives; being special purpose vehicle UK Trucks Claim Limited (opt-out claim) and the Road haulage Association Limited (opt-in claim). The defendants’ opposition to the suitability (or otherwise) of both applicants primarily relates to issues concerning the adequateness of the funding arrangements that have been entered into. Judgment in relation to the funding issues is likely to be handed down in the coming months. No ruling has been made on the wider CPO applications, pending the outcome of the Mastercard application.


Bond disputes

3. Ukraine v The Law Debenture Trust Corporation plc (Rev 1) [2018] EWCA Civ 2026

Court of Appeal held that High court was wrong to grant Russia summary judgment against Ukraine for non-payment Eurobond, but rejected Ukraine’s arguments that the contractual arrangements should contain implied terms.

The trustee entered into a trust deed with the Ukraine, under which Ukraine issued transferable Eurobond notes. The deed, which was expressed to be governed by English law, had been signed on behalf of Ukraine by the Ukrainian Minister of Finance, acting on the instructions of the Cabinet of Ministers of Ukraine.

The Russian Federation was the sole holder of the notes. Ukraine made three interest payments under the notes before it put in place a moratorium preventing the notes from being repaid on their due date. On Russia’s direction, the trustee brought a claim against Ukraine for the final repayment amount and in due course applied for summary judgment on its claim, which was granted.

Ukraine appealed including on the ground that:

“The judge erred in his approach to the implication of terms arising (a) if Russia prevented or hindered performance of the contract and did not address the case of (b) an implied term that there would be no enforcement while in breach of public international law. The legal test for implication of terms was satisfied.”

The Court of Appeal held that the court at first instance was right to conclude that the legal test for the implication of terms was not satisfied and accordingly rejected Ukraine’s arguments under both grounds.

The approach is that stated by Lord Neuberger in Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd and another [2015] UKSC 72.

The Court of Appeal at paragraph 209 of their judgment stated:

“First, and perhaps most importantly, the structure of Ukraine’s debt obligations took the form of tradable Eurobonds traded on the Irish Stock Exchange. …. The character of the Notes as tradeable financial instruments gives rise to certain consequences which, in our view, are strong counter-indicators against the implication of Ukraine’s suggested terms.

“First, … any implied terms have to be derived from the contractual documentation which would be available to subsequent holders of the Notes, as well as to the initial holder or holders.

“Finally, … the implication of Ukraine’s suggested terms would, as the judge held, effectively render the Notes unworkable and untradeable and would, therefore, conflict with their express terms.”

Court of Appeal held that that Ukraine’s argument that the public policy exception to the Foreign Act of State Doctrine could not be said to have no real prospects of success.


4. Deutsche Trustee Company Ltd v Duchess VI CLO B.V. & Ors [2019] EWHC 778 (Ch)

The High Court holds that an incentive collateral management fee was not payable to the collateral manager of a collateralised loan obligation (CLO).

The collateral manager claimed it was entitled to just over €15 million in respect of an incentive collateral management fee (ICMF) as a result of Class F Noteholders voting to redeem the Class F Notes early.

The High Court considered this to be a case where the transaction documentation was clear, applying the Rainy Sky case. The court stated at paragraph 49: “Commercial parties buying into such traded instruments expect to be bound by the language of them. They are entitled to certainty and predictability that the adoption of a proper contextual interpretation of the language produces.”

Court held that the collateral manager was not entitled to an incentive fee when the Class F Noteholders exercise their option to redeem the notes early.


5. The Bank of New York Mellon, London Branch v Essar Steel India Ltd [2018] EWHC 3177 (Ch)

The High Court refuses declarations sought by trustee of unsecured notes as to the amounts due.

The claimant sought declarations against the defendant as to the amounts due and payable in respect of certain US Dollar 0.25% unsecured notes (the Notes) due in 2018, issued by the defendant and constituted under the terms of a trust deed dated 5 December 2003.

The court accepted that the defendant was in default under the Notes but found that the declarations sought had no clear utility and declined to grant them.

The court made two main points:

(i) The declarations would have no utility as the defendant would not pay if the declarations were made as it appeared the defendant was simply unable to pay and (ii) the declarations might have an effect on the foreign insolvency process.

For the above reasons, the court refused to make the declarations.


ISDA disputes

6. Lehman Brothers Finance AG (in liquidation) v (1) Klaus Tschira Stiftung GmbH & Anor [2019] EWHC 379 (Ch)

The High Court provides guidance on the limitation of the discretion that a determining party has in the calculation of loss under the 1992 ISDA Master Agreement.

The court considered the defendant’s challenge to the loss calculation on two grounds: (i) that the loss calculation was not in accordance with the 1992 ISDA Master, or (ii) that it was unreasonable (irrational).

The defendants had requested quotes for the replacement derivative transaction on an unsecured basis, even though the original transactions were on a secured basis. The rationale was that the shares securing the transaction were caught up in the Lehman bankruptcy and the defendants had been unable to access them.

The court held that the meaning of “loss” in the 1992 ISDA Master Agreement is subject to the principles of remoteness and is not an “unrestricted indemnity for all loss”.

The court concluded that the inclusion in the loss calculation of the extra amount attributable to the inability of the defendants to provide collateral for the replacement transactions was not in accordance with the loss definition, properly construed.

Similarly, the court held that the uncollateralised replacement contract, which formed the basis for the loss calculation, was not a reliable guide to the value of what had been lost. In the court’s judgment, to use that basis of calculation of loss was not a rational approach for the defendants to take.

The court cited Fondazione Enasarco v Lehman Brothers Finance SA [2015] EWHC 1307 to show that the non-defaulting party has some latitude in respect of using a replacement contract that is not identical to the original transaction. As long as the differences in the actual or assumed terms of the replacement contract are not sufficiently material, then the choice of a non-identical replacement contract will not invalidate the determination of loss.


Benchmark disputes

7. Marme Inversiones 2007 SL v NatWest Markets plc & Ors [2019] EWHC 366 (Comm)

The Commercial Court dismisses claims that a bank made implied representations as to EURIBOR rate setting in the context of selling an interest rate swap apart from implied representation detailed in PAG v RBS case.

The claimant alleged that the implied representations were to the effect that the first defendant (Royal Bank of Scotland (RBS)) had not sought to manipulate EURIBOR, had no reason to believe that other banks were seeking to do so, and had not conducted itself in such a way as to undermine the integrity of EURIBOR.

The court stated:

“(i) It is possible for a representation to be made expressly or impliedly through words or conduct. For a representation to be implied, silence or mere assumption is not usually enough as there is no general duty of disclosure. It is necessary to view the words or conduct objectively to determine whether an implied representation has been made, although the natural assumptions of the reasonable representee will be helpful in assessing whether an implied representation has been made through the conduct of the representor;

“(ii) whether or not a representation is implied is ultimately a question of fact to be determined in the circumstances of the particular case;

“(iii) more may be required, in terms of words or conduct, for a representation which is wide in meaning or complex to be implied; and

“(iv) it is less likely that a representation that is vague, uncertain or ambiguous would be objectively understood to have been made from words or conduct.”

On the facts, the court decided that none of “… the EURIBOR representations as pleaded can be implied in this case, nonetheless I do consider that RBS’s conduct in going along with the Swaps was sufficient for the implication of a much narrower representation, namely that RBS was not itself manipulating, and did not intend to manipulate or attempt to manipulate, EURIBOR. That is not, however, an implied representation for which Marme contends – in all probability because Marme recognises that it is in no position to establish falsity.”

Assuming that the representations had been made, falsified, and relied upon, the remedy of rescission would have been barred.



The English courts continue to emphasise that they should be able to decide disputes with the aid of all relevant material and, therefore, have taken a narrow approach to litigation privilege.

8. Glaxo Wellcome UK Ltd v Sandoz Ltd [2018] EWHC 2747 (Ch)

The High Court finds that information gathering by an in-house lawyer for the purpose of obtaining external legal advice is not protected by litigation advice privilege.

Chief Master Marsh stated that although there had been controversy about the scope of legal advice privilege as it relates to corporate bodies the position has now been settled by the recent decision in The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd (“ENRC”) [2018] EWCA Civ 2006.

At paragraph 17 of his judgement he highlighted and added emphasis to a passage from Mr Justice Andrews’ judgment in ENRC, which had been cited and apparently approved by the Court of Appeal:

“… the employee must be authorised to seek/obtain the legal advice that is the reason for the communication…”.

Chief Master Marsh held that defendants had not discharged the burden on them of demonstrating an entitlement to legal advice privilege relating to the two documents in questions. He gave a number of reasons for his decision including that he found no finding that the employee was authorised to seek legal advice from external lawyers acting for the second defendant.

It seemed to him more likely that the in-house counsel may have been given the task of obtaining legal advice and she was therefore obtaining information for that purpose. In that event, her exercise in gathering information from the employee would not be subject to legal advice privilege. The provision of information by the employee would not make the communication privileged unless he was the client for the purposes of him obtaining legal advice.


9. WH Holding Ltd v E20 Stadium LLP [2018] EWCA Civ 2652

The Court of Appeal holds that six emails between a company’s board members discussing a commercial proposal for the settlement of a dispute were not covered by litigation privilege.

The court stated that the issue to be decided was whether litigation privilege extended to documents that were concerned with the settlement or avoidance of litigation where the documents neither seek advice or information for the purpose of conducting litigation nor reveal the nature of such advice or information. They concluded that it does not.

The Court of Appeal stated that they had not been shown any authority which would extend the scope of litigation privilege to purely commercial discussions. In particular it did not consider that ENRC extended the scope of the documents covered by litigation privilege. The judgment of the court stated: “We do not consider that there is any justification for extending the scope of litigation privilege in that respect. It has always been recognised that privilege is an inroad into the principle that a courts should be able to decide disputes with the aid of all relevant material.



The English courts continue to emphasise that they should be able to decide disputes with the aid of all relevant material and, therefore, have taken a broad approach to allowing disclosure from regulatory and criminal investigations in civil proceedings.

10. R (On The Application Of KBR Inc) v The Director of the Serious Fraud Office [2018] EWHC 2368 (Admin)

The High Court holds that the power of the Director of Serious Fraud Office to require production of documents for a fraud investigation under section 2(3) of the Criminal Justice Act have extraterritorial application.

The court held that the extraterritorial ambit of section 2(3) of the Criminal Justice Act 1987 extended to a foreign company in respect of documents held outside the jurisdiction of the United Kingdom, provided that there was a sufficient connection between the company and the jurisdiction and that there was such a sufficient connection in this case.


11. Omers Administration Corporation & Ors v Tesco plc [2019] EWHC 109 (Ch)

The court orders Tesco to disclose to the claimants documents it had received from the SFO. The court takes the view that it would not be just to deny the claimants the documents even though those documents were obtained by the SFO from third parties using its powers to compel the production of information/documents under s.2 of the CJA, and they had been provided to Tesco during the DPA process on the understanding between the SFO and Tesco that the information they contain would be kept confidential.

The defendant had in its possession and control certain documents obtained by the Serious Fraud Office (SFO) for the most part pursuant to (or in anticipation of) the exercise of its powers under section 2 of the Criminal Justice Act 1987 (CJA 1987). The SFO provided the defendant with these documents (the SFO Documents) for the purpose of negotiations (actual and prospective) about a deferred prosecution agreement (the DPA) eventually concluded between the SFO and the defendant’s subsidiary, Tesco Stores Limited in 2017.

These documents are, in the view of the defendant and its advisers, relevant to the matters in issue in the present proceedings. However, in circumstances where most of the documents had been obtained by or in the anticipation of compulsion, the SFO imposed strict restrictions on the defendant as to the use that could be made of such documents to protect the persons from whom they were obtained. The defendant is thus caught between its obligations to the parties to the litigation as regards to disclosure, and its obligations to keep the SFO Documents confidential and private, unless otherwise directed by the court.

The question the court considered is whether, having regard to (a) the terms on which the SFO obtained the SFO Documents and (b) the terms on which the SFO provided the SFO Documents to the defendant, such documents should be disclosed to the claimants, and if so, whether any restrictions should be stipulated in relation to their retention and use.

The court decided that none of the objections to disclosure of the documents in question was such as to warrant what would be an unusual, and it may be in the context of an application by one party against another, unprecedented, order preventing their production.

Subject to the possibility of imposing restrictions, the court was of the view that it would not be just to deny the claimants production of the documents that the defendant has, and which are likely to be of considerable litigious advantage to such claimants (and may well also have been of litigious advantage to the defendant itself)


Collateral Use

12. The ECU Group plc v HSBC Bank plc [2018] EWHC 3045 (Comm)

The High Court grants retrospective permission for collateral use of documents disclosed pursuant to pre-action disclosure, but with tough conditions.

The judgment involved documents (the Disclosed Documents) provided by HSBC companies to the ECU Group (ECU) by way of pre-action disclosure under CPR31.16, pursuant to an order.

The Disclosed Documents are subject to the rule of law that they may be used “only for the purpose of the proceedings in which [they were] disclosed” (CPR 31.22(1). Since the Disclosed Documents were disclosed under pre-action disclosure, the ‘proceedings’ are proceedings to be commenced in the High Court against one or more of the HSBC companies.

The ECU sought retrospective permission for certain collateral uses of the Disclosed Documents (ie uses other than for the purpose of these proceedings).

The court found that there had been unauthorised collateral use. It was reiterated that the prohibition on collateral use extended beyond the disclosed documents themselves by citing Lord Oliver in Crest Homes plc v Marks [1987] 1 AC 829 at 854A-B who said: “… the implied undertaking applies not merely to the documents themselves but also to information derived from those documents whether it be embodied in a copy or stored in the mind.”

The ECU Group had sought advice from US firms for it to consider and in due course (if so advised) prepare and commence US proceedings against HSBC Bank USA, N.A. and/or US-domiciled individuals.

The question of where in principle the applicant might bring a claim against HSBC Bank USA, N.A was a legitimate question for it investigate for the purpose of taking final decisions on what claims to bring (including what defendants to name) in the proceedings to be brought in the UK. Such an investigation would naturally include the taking of advice from US attorneys.

If the purpose in obtaining advice as to US law had been confined to that purpose, there would have been no collateral use. In those circumstances, it was appropriate to grant retrospective permission. However, conditions would be attached so that there would be no prospect of the applicant gaining advantage from the degree to which its purpose was improper. That required, among other things, that the US firms’ existing retainers be terminated, that (unless permission be granted) they should not be instructed again in connection with the subject-matter of the proceedings and that their advice should not be provided to anyone else.


13. ACL Netherlands BV v Lynch [2019] EWHC 249 (Ch)

The High Court refuses an application by some of the claimants to provide to the United States Federal Bureau of Investigation (the FBI) copies of the documents disclosed by the defendants and the witness statements served in these proceedings (in which a nine-month trial is imminent).

A subpoena (the US Subpoena) had been issued in the name of a Grand Jury of the US District Court for the Northern District of California (the Grand Jury) dated 30 October 2018. The US subpoena was not, in fact, addressed to any of the claimants but rather to “The Custodian of Records, Hewlett Packard Enterprise (HPE)”. HPE is incorporated and operates in the United States of America and is not a party in the current proceedings. It is, however, the wholly-owning parent company (directly or indirectly) of each of the applicants.

The court’s permission was required because the material was held subject to the provisions of CPR r31.22 (in the case of disclosed documents) and r32.12 (in the case of witness statements). The applicants submitted that the court should give its permission in this case because they should not be put in the position of being unable to comply with the US Subpoena, which they contend would put them in potential contempt of the US court. They submitted that any countervailing prejudice to the defendants is of less severity and consequence.

The court stated that the prohibition against collateral use set out in r.31.22 and r.32.12 gave effect “to important public policy, and in exercising its discretion to give permission for collateral use, the court must be circumspect and protective of that policy”.

The leading case regarding the court’s overall approach to its discretion is Crest Homes Plc v Marks [1987] AC 829. That case made clear that the court will only release or modify the restrictions where (a) there are special circumstances which constitute “cogent and persuasive reasons” for permitting collateral use, and (b) the release or modification will not occasion injustice to the person giving disclosure.

The court was “not persuaded that in this case sufficient “cogent and persuasive” reasons in favour of collateral use now (so close to the English trial commencing in March) have been established to outweigh the public interests protected by CPR 31.22 and 32.12”.



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