Banking Litigation
March 2002
slaughter and may
contents
Page
Introduction 1
Our Litigation Practice 3
Our approach to Litigation 4
Banking Litigation 5
The Resources of the Litigation Department 9
Costs 10
Appendix: 11
Slaughter and May -
Litigation recent important cases
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introduction
Slaughter and May is one of the leading law firms in the world. It is
based in London, with offices in Paris, Brussels, Singapore, Hong Kong
and New York. The London office has over 1,100 staff of whom some
600 are lawyers led by 101 partners. There are a further 19 partners,
with supporting staff, in overseas offices.
The firm is committed to providing its clients with a service of the
highest quality combining technical excellence, commercial
understanding and a practical, constructive approach. We attach great
importance to our relationships with clients.
Commercial litigation is an important part of our practice and this
brochure outlines the nature of Slaughter and May’s litigation
practice, and in particular its experience in all aspects of banking
litigation, as well as the facilities and services provided by our
Litigation Department. It also describes our approach to litigation.
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our litigation practice
Our Litigation Department has established an international reputation,
acting for a broad spectrum of clients, particularly those in the
corporate and financial sectors.
We handle a wide range of civil disputes and proceedings as well as
white collar crime and criminal proceedings arising in a corporate
context. This leads us to represent clients before the English courts, in
inquiries and investigations, and also before other tribunals. We act in
domestic and international arbitrations both in the United Kingdom
and abroad involving both English and foreign law.
Our advice is sought in connection with a broad range of commercial,
financial and industrial disputes including:-
> banking > landlord and tenant
> insurance and reinsurance > construction and building
> financial services > planning and rating
> insolvency > environment
> mergers and acquisitions > defamation
> product liability > professional negligence
> oil and gas > commodity trade arbitrations
> aviation > fraud and asset tracing
The work of the Department includes commercial fraud investigations
and investigations by the Department of Trade and Industry and other
inquiries and disciplinary proceedings by regulatory bodies. We also
deal with a variety of administrative law matters which frequently
involve proceedings for judicial review.
Work is often handled in conjunction with or in support of specialist
lawyers from other departments, for instance tax, pensions or
employment matters and cases involving EC and domestic
competition law. Disputes in relation to trade marks, patents,
copyright, designs and information technology are dealt with by the
firm’s Intellectual Property Group.
We are one of the founder members both of the Centre for Dispute
Resolution and the City Disputes Panel and we are also a member of
the British Academy of Experts.
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our approach to litigation
The underlying aim of our litigation lawyers is to help our clients find
a constructive and commercially advantageous solution to disputes in
which they find themselves involved, whatever their size or
complexity. Our lawyers are expected to be positive and creative in
their approach to dispute resolution, whether this be achieved by
negotiation, mediation, litigation or arbitration. Where litigation or
arbitration is necessary, we take all steps to ensure that our client’s
case is advanced in the most efficient and effective way. In our
experience careful groundwork significantly increases the prospects of
achieving the successful resolution of a dispute and our approach to
litigation is characterised by thorough and detailed preparation.
No commercial dispute can be resolved in isolation from its business
background and, in order to achieve the best outcome, we work
closely with the client to gain a proper understanding of the client’s
business objectives and priorities.
There will always be a partner involved in and directly responsible to
the client for every matter on which we are instructed. We regard it as
essential that the partner is available to the client for reviewing
progress, discussing key issues and providing tactical guidance.
We have close professional relationships with the finest specialist
advocates in the areas in which we practise. Litigation frequently
involves expert witnesses being called to give evidence in support of
the client’s case. We have established valuable links with experts in
many fields including banking, broking, corporate finance,
accountancy and auditing, insurance and reinsurance, oil and gas,
engineering and construction.
We have many years of experience of working with lawyers in Europe,
the USA, the Middle and Far East, Australia, South East Asia, India,
Africa and elsewhere. We regularly advise lawyers in other jurisdictions
in connection with proceedings in the English courts. We are also
frequently involved in substantial disputes involving multi-
jurisdictional issues and have considerable experience of disputes with
a US or European connection. In recent years problems involving the
Brussels and Lugano Conventions have been regularly dealt with by
members of the Department.
In addition, we have avocats in our Paris office and, as such, are able
to plead cases directly before the French courts.
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banking litigation
The firm has developed a formidable reputation for its handling of all
types of banking litigation no matter how large or complex the
dispute in question. This work has included both domestic banking
problems as well as international banking problems and practitioners
in the Litigation Department are equally well equipped to deal, for
example, with a domestic dispute over the alleged breach of a bank
mandate as with the realisation of a disputed security interest in a
foreign-based asset on behalf of a syndicate of international banks.
We have worked with banking clients in many jurisdictions, both
through their London branches and directly with their head offices,
and our lawyers have an understanding of the traditions and business
customs which prevail in different parts of the world. This experience
and understanding, together with the firm’s professional links in many
countries, enables Slaughter and May to provide its banking clients
with first-class legal advice across the world.
In recent years we have been involved in a number of important
banking disputes. The following cases, all of which are a matter of
public record, illustrate some of the areas covered by our banking
litigation practice.
General “work out” situations and debt recovery
> Acting for the administrators of Barings PLC in all aspects of the
investigations and recovery operations, both in England and
worldwide, following the collapse of the bank, including very
substantial claims against the Bank’s auditors.
> Acting for Deutsche Morgan Grenfell PLC in the various aspects of
the Peter Young affair.
> Acting for Abbey National plc in relation to a representative
investor compensation action in Jersey involving alleged losses in
connection with an independent offshore investor scheme.
> Acting for Hambros Bank Limited on various facets of the aborted
bid by Andrew Regan for CWS.
> Acting for Deutsche Bank Plc in relation to a major dispute over
certain promissory notes.
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> The realisation of securities provided to Punjab National Bank by
Esal (Commodities) Limited, a commodities trading company
which collapsed in late 1984 owing some US$350 million amid
investigation by governmental agencies relating to alleged fraud
and false accounting. These securities ranged from a hotel in New
York to a tea estate in India. Apart from complex disputes over
each of these securities the case involved disputes over the
banker’s right of set-off both pre and post liquidation and dealing
with private examinations of bank officers.
> Acting for the administrators of Equatorial Bank Plc in the
realisation of its loan book.
> A US$70 million case involving an international syndicate of banks
seeking to recover a non-performing loan made to a Middle
Eastern borrower.
> Acting on behalf of one of the successful plaintiffs in the important
set-off case of M.S. Fashions -v- BCCI arising out of the collapse of
BCCI.
> Acting on numerous occasions for a variety of banks served with
both domestic and foreign Court Orders.
Documentary credits
> Acting in three cases which have become leading authorities in
critical areas of documentary credit law. The first - Bankers Trust
Company -v- State Bank of India, in which the firm acted for the
successful defendant - dealt with “reasonable time” under the UCP.
The second - The Royal Bank of Scotland Plc -v- Cassa di Risparmio
delle Provincie Lombarde & Others, in which the firm acted for The
Royal Bank of Scotland Plc - dealt with jurisdictional issues under
the Brussels Convention. The third - the recent case of Kredietbank
NV (now KBC Bank N.V.) -v- Midland Bank plc, dealt with the issue
of the marking of original documents.
> Acting for the Bank of Baroda as confirming bank in obtaining a
reasoned judgment against the non-resident issuing bank which
declined to appear before the English court. This enabled the
judgment to be enforced in India against the issuing bank.
> Acting for Goodman Holdings in a dispute with Rafidain Bank
involving letters of credit payable in different currencies with a
total value of £115 million.
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> Acting for Credit & Commercial Industrial in relation to a dispute
with China Merchants Bank.
> Acting for a Canadian bank in a dispute relating to a letter of credit
issued in Turkey, confirmed in London and advised in Chile. The
dispute raised issues relating to the nature of discrepancies under
the credit and jurisdiction.
> Acting for an Egyptian bank in relation to problems over the
assignment of the proceeds of various letters of credit.
Derivatives
> Acting for Sakura Bank in a recent case concerning a SWAP
agreement in which the court has given important guidance on the
interpretation of certain clauses in ISDA standard documents.
> Acting for Sakura Bank in a SWAP transaction case against Isveimer
Spa, involving the interpretation of the jurisdiction clause in the
ISDA Master Agreement.
> Acting for Société Générale on a derivative dispute with ANZ Bank.
> Acting for Swedish, Norwegian, Russian, Malaysian and US banks in
a variety of disputes under the ISDA Master Agreement which were
solved prior to entering the public domain.
Insurance
> Acting for Punjab National Bank in a US$80 million political risk
insurance claim against Lloyd’s underwriters.
> Acting for Chemical Bank in a major insurance case involving the
duties of underwriters.
> Acting for Morgan Guaranty Trust Company of New York in a
political risk insurance claim against Lloyd’s brokers and
underwriters.
> Acting for a Scandinavian bank on its fidelity insurance problems.
> Acting for several banks in relation to their mortgage indemnity
insurance problems.
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Fraud
> Acting for a Czech bank in a letter of credit dispute involving
allegations of fraud by the beneficiary.
> Acting for an Indian bank in a dispute involving commercial fraud
by one of its customers.
> Acting for a Bahraini bank in a case involving fraud by the
beneficiary.
> Acting for The Salvation Army in a high profile commercial fraud
case involving tracing monies transferred to banks in many
different jurisdictions.
> Acting for Allen, Allen & Hemsley in a commercial fraud case
involving issues of partnership, trust and banking law.
< Acting for the National Commercial Bank of Saudi Arabia in a
commercial fraud action commenced in the Sharjah Federal Court
in the UAE.
Sovereign immunity
> Acting for Central Bank of Yemen in a major dispute arising out of a
World Bank sovereign debt rescheduling.
> Acting for Banco Nacional de Cuba, Cuba’s former central bank, in
an action involving issues of sovereign immunity.
Other banking disputes
> The firm has extensive experience in all other areas of domestic
and international banking disputes and has acted in many disputes
between both clearing and other banks and their customers. Such
disputes have involved breaches of mandate, issues of constructive
trust, set-off, inter-pleader relief, garnishee proceedings and a full
range of other matters arising from the banker-customer
relationship.
A list, which includes some of the cases referred to above, of some of
the major litigation and arbitration (not limited to the banking arena)
undertaken by the firm recently (details of which are now a matter of
public record) appears as an Appendix to this brochure.
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the resources of the litigation department
The Litigation Department operates as a single group although various
partners, in addition to dealing with general commercial litigation, also
specialise in particular fields.
With more than 50 lawyers the Department provides a complete
service and has the resources to handle the largest and most complex
cases as well as small and more routine matters.
The Department ensures that all its lawyers are kept up to date with
recent changes and developments by the active use of its own
information office. Apart from centralising and developing know-how
within the Department, we provide all lawyers working in the
Department with regular information including reported cases,
statutory provisions and amendments, changes in rules of court and
other matters of interest. We have extensive computer research and
retrieval facilities. In addition, the Department maintains a wide-
ranging training programme for all its lawyers.
Our lawyers are assisted by the Department’s specialist support
services including research facilities, paralegal staff, document
administration and other resources. We are making increasing use of
computerised document management systems on larger or more
complex cases.
We have litigation lawyers in both our Paris and Hong Kong offices
who can be called upon whenever the need arises. In Paris, please
contact Edouard Bertrand, and in Hong Kong please contact Mark
Yeadon.
For further information, please contact any of the partners in the
Litigation Department.
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costs
We are conscious of the costs of litigation both in terms of
professional fees and executive time. The firm’s policy is to provide a
first class legal service in a way which is cost-effective whilst serving
the client’s best interests. We aim to ensure that our litigation work
produces value for our clients and that our fees are competitive.
A very flexible approach to costs is adopted and the partners are
always willing, either in advance of receiving instructions or at any
later stage, to discuss both the level of costs and ways in which those
costs might be structured.
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appendix
Slaughter and May - Litigation
Recent important cases
Orange plc multi-million pound dispute with
Mannesman Eurokom GmbH concerning a
7% shareholding in the Spanish company,
Xfera Moviler.
Abbey National plc a substantial investor action in Jersey
arising out of a failed offshore investment
scheme based in the Bahamas and the US.
Punjab National Bank political risk insurance case involving
-v- Murphy, Edmunds claims of some US$80 million.
and others
Banque Keyser large insurance dispute examining the
Ullmann -v- Skandia duties of underwriters.
R.J.R. Keeling -v- major reinsurance dispute concerning
The Travelers asbestos-related losses.
Insurance Company
Feltrim advising the Feltrim Names Association in
relation to Lloyd’s settlement proposals.
Lloyd’s Names advice in relation to Lloyd’s Reconstruction
Validation Steering and Renewal Proposals.
Group
British Gas plc oil dispute involving issues of pre-emption
rights.
Texaco (Great Britain) major dispute arising out of an explosion
Ltd on a North Sea oil rig.
Premier Consolidated significant dispute arising out of the
Oilfields PLC operation of the Wytch Farm oilfield.
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Westland Helicopters international arbitration resulting in an
plc award of £385 million, including
enforcement of award against French and
US assets.
Western Company of major arbitration held in London under
North America Indian law and enforcement of the award
in India up through to the Supreme Court
of India.
State Bank of India banking case involving a US$10 million
-v- Bankers Trust letter of credit dispute which is now the
leading case on the concept of ‘reasonable
time’.
British & large commercial action involving claims
Commonwealth -v- of about £250 million.
Quadrex
Forte plc -v- The Savoy high profile minority shareholders’ class
Hotel plc action.
The Nauru Phosphate commercial fraud case involving issues of
Royalties Trust -v- Allen, partnership, trust and banking law.
Allen & Hemsley
The Republic of Haiti international fraud case establishing
-v- Duvalier guidelines for worldwide freezing of assets.
The Salvation Army high-profile commercial fraud case and
Charity Commission inquiry.
Morgan Stanley -v- one of the largest summary judgments
Olympia & York ever awarded by an English court.
Cheltenham & conversion of building society and
Gloucester -v- The construction of the Building Societies Act
Building Societies 1986.
Commission
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House of Fraser DTI inquiry followed by long-running
litigation.
Maxwell major role involving civil disputes and
regulatory investigations.
Chemical Bank -v- syndicated loan recovery involving claims
Eastern Cotton in excess of US$70 million.
Goodman Holdings dispute involving letters of credit payable
-v- Rafidian Bank in a variety of currencies with a total value
of some £115 million.
The Royal Bank of letter of credit case involving important
Scotland plc -v- Cassa jurisdictional issues.
di Risparmio delle
Provincie Lombarde
& Others
The Administrators of the realisation of the Bank’s loan portfolio.
Equatorial Bank PLC
M.S. Fashions & leading case on bankers’ rights of set-off.
Others -v- BCCI
The Administrators of extensive investigation and recovery
Barings PLC exercise following the collapse of the bank.
The Administrators of £1 billion claim against the bank’s auditors.
Barings PLC
The National commercial dispute in relation to
Commercial Bank of financing of the purchase of oil cargoes
Saudi Arabia involving claims in excess of US$40
million.
Standard Chartered major arbitration in India.
Bank
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Hepworth major arbitration/warranty claim in France.
Redland plc major warranty claim in France, including
the enforcement of a French arbitral award.
Glaxo-Wellcome PLC leading case on Inland Revenue procedure
under Transfer Pricing legislation.
Eurotunnel challenge by Eurotunnel to legality of
intra-community duty-free system.
Woolwich plc complex mortgage fraud action.
Paragon Finance Plc mortgage indemnity policy claims against
Eagle Star and Sun Alliance.
The Law Debenture solicitors’ negligence action involving
Trust Corporation p.l.c. issues of pensions law.
Kredietbank N.V. -v- recent letter of credit case concerning the
Midland Bank plc marking of original documentations.
Sakura Bank -v- recent case concerning SWAP agreement.
Nuova Safim
Hambros Bank Limited acting for Hambros on all matters relating
to the aborted bid by Andrew Regan for
CWS.
Sotheby’s conducting major investigation into
activities of Sotheby’s.
Kuwait Petroleum complex international fraud action
Corporation involving claims in excess of US$80
million.
Sakura Bank -v- recent case concerning SWAP transaction.
Isveimer Spa
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Federative Republic major international dispute in different
of Brazil jurisdictions relating to coffee purchases
on the London Terminal market.
Unilever claim against Mercury Asset Management
arising out of Mercury’s Management of
Unilever’s pension fund.
Metallgesellschaft A.G. major commodities dispute with Codelco.
BOC Plc Indian infrastructure project dispute.
BOC Plc substantial dispute arising out of the sale
of its biotechnology companies.
Kwik-Fit Insurance acting in claim against Bull Information
Services Services Ltd arising out of Bull’s design
and installation of a new IT system.
Avions de Transport aircraft leasing dispute with Royal Air
Régional Cambridge, Malaysian Air Services and
Malaysian Helicopters Ltd.
Enron acting in a multi-million pound claim
against ICI arising out of the sale of a
utilities and services business.
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contact addresses
London Hong Kong
One Bunhill Row 27th Floor
London EC1Y 8YY Two Exchange Square
T +44 (0)20 7600 1200 Hong Kong
F +44 (0)20 7090 5000 T +852 2521 0551
F +852 2845 2125
Paris F +852 2845 9079
112 Avenue Kléber F +852 2502 2578
75784 Paris Cedex 16
France NewYork
T +33 (0)1 44 05 60 00 1270 Avenue of the Americas
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New York
Brussels NY 10020-1700
Avenue de Cortenberg 118 USA
B-1000 Brussels T +1 212 632 4800
Belgium F +1 212 632 4840
T +32 (0)2 737 94 00
F +32 (0)2 737 94 01 www.slaughterandmay.com
Singapore
1 Raffles Place #54-00
OUB Centre
Singapore 048616
T +65 6532 1200
F +65 6536 2001
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