BANKING & FINANCE LITIGATION UPDATE

Issue 58

We wish to establish a dialogue with our readers. CONTENTS Please contact us at B&FL Update and let us know which particular areas you are interested in and what Domestic Banking…………………………………...2 you would find helpful. Domestic General……………………………………3 The Banking & Finance Litigation Update is published monthly and covers current developments European Banking……….……...…………………...4 affecting the Group's area of practice and its clients during the preceding month. European General……….………...…………………5

This publication is a general overview and discussion International Banking………………………………..5 of the subjects dealt with. It should not be used as a International General….……………………………..5 substitute for taking legal advice in any specific situation. DLA Piper UK LLP accepts no Press Releases………….…………………………….6 responsibility for any actions taken or not taken in reliance on it. Case Law……………….……………………………8 Where references or links (which may not be active links) are made to external publications or websites, the views expressed are those of the authors of those publications or websites which are not necessarily those of DLA Piper UK LLP, and DLA Piper UK LLP accepts no responsibility for the contents or accuracy of those publications or websites.

If you would like further advice, please contact Paula Johnson on 08700 111 111. DOMESTIC BANKING global banks, will focus on customers in Malaysia and Saudi Arabia. BARCLAYS Independent, 5 October 2012 1. Barclays has set aside a further £700m to cover the cost of compensation for mis-selling payment 7. Creditors led by HSBC have seized control of protection insurance. The move sparked Biffa as it struggles to repay loans totalling over speculation that other banks would follow suit. £1 billion. The waste collector, which employs over 6,000 people, was saddled with the loans Guardian, 19 October 2012 after it was taken private in 2008 by investment companies Montagu, Global Infrastructure 2. About 18,000 Barclays call centre staff will no Partners and the private equity arm of Halifax longer receive commission payments for selling Bank of Scotland. financial products; instead they will receive bonuses based on the quality of the advice they Independent, 1 October 2012 give Daily Telegraph, 11 October 2012 8. A New York court has dismissed a case against 3. The promotion of two managers from the retail Lloyds and its former chairman and CEO (Sir arm of Barclays to its executive committee will Victor Blank and Eric Daniels) brought by a US see retail bankers getting a bigger say in how the retail investor Albert Ross, which accused is run. Barclays new chief executive, Antony of fraudulent behaviour during its controversial Jenkins, has promoted the chief executive of takeover of HBOS in 2009. Barclaycard, Valerie Soranno Keating, and the head of the bank's UK retail banking business, Daily Telegraph, 18 October 2012 Ashok Vaswani, to the reconstituted top management team with immediate effect. Ms 9. The Financial Services Authority ("FSA") is Keating has also been given responsibility for threatening to block plans by Lloyds Banking running Barclays' global cards and payments Group to pay a small dividend to shareholders business, while Mr Vaswani will be responsible from next year's profits. The regulator believes for global retail and business banking. the state-owned bank should use the funds to boost its capital to protect it from future economic Daily Telegraph, 3 October 2012 instability or a break-up of the eurozone.

4. Barclays' infrastructure arm is in talks to sell its Sunday Times, 7 October 2012 remaining 40 per cent stake in student housing manager UPP to Chinese company Gingko Tree THE ROYAL BANK OF SCOTLAND Investments. Earlier this month the bank sold the other 60 per cent of its stake to a Dutch pension 10. Sir Philip Hampton, chairman of The Royal Bank fund. of Scotland ("RBS"), has announced that the Government could begin selling shares in the bank Daily Telegraph, 28 September 2012 before the next general election. Sir Philip said that basic restructuring work would be complete 5. Barclays is to close three of its nine branches in by the end of 2013. India as part of a move away from retail banking in the sub-continent. Daily Telegraph, 18 October 2012

Independent, 28 September 2012 11. Andrew Bailey, head of the bank supervision arm of the FSA, has written to RBS boss Stephen HSBC Hester, pointing out that a sale of its American arm - Citizens - and a further scaling back of the 6. HSBC is to scale back its global Islamic banking investment bank, would help its capital position. operations and stop offering products in the UK as The letter is a sign that the bank is facing calls part of a wider restructuring. The bank, one of the from regulators to begin a major restructuring of pioneers in developing Islamic finance among its American business.

Guardian, 17 October 2012

02 | Banking & Finance Litigation Update - Issue 57 12. Virgin Money is reported to be front-runner in the 19. RBS will take on 16 unemployed young people as race to buy over 300 RBS branches which are apprentices in London. The apprentices will be now back on the market after Santander withdrew employed in the bank’s corporate banking from the deal over delays. Virgin Money lost out division for six months and it is hoped that as to Santander in the original round of bidding two many as possible will stay on in permanent roles. years ago. Private equity group JC Flowers and They will be given “hands-on” experience in key NBNK are also said to be interested in purchasing areas such as client relationship management, risk the branches. RBS has a year to dispose of them. analysis and IT.

Telegraph, 15 October 2012 Evening Standard, 27 September 2012 13. In the wake of the collapsed deal to sell 316 DOMESTIC GENERAL branches to Santander, RBS chairman Sir Philip Hampton will ask the European Commission if 19. The Treasury Select Committee has accused the the state-owned bank can hold onto the branches FSA under the chairmanship of Lord Turner of an now that the climate in Brussels is "more "astonishing lack of appreciation of the flexible". understandable public interest in the failure of Royal Bank of Scotland" and has accused the Times, 15 October 2012 regulator of serious flaws in its culture and governance. 14. A package of support to help Britain's young entrepreneurs have been unveiled by RBS as new Independent, 19 October 2012 research revealed a "confidence gap" for many who plan to start their own business. The series of 20. The Financial Conduct Authority (FCA) is measures, which form part of the new RBS planning to divide the 26,000 companies it will Inspiring Enterprise initiative, were launched by supervise into separate groups. Banking, RBS chief executive Stephen Hester. RBS aims, insurance groups and businesses with large by the end of 2015, to help an additional 100,000 numbers of retail customers will be assigned young people and will inject a further £1 million individual supervisors. into Scotland. Financial Times, 18 October 2012 The Scotsman, 9 October 2012 21. Paul Tucker, the deputy governor of the Bank of 15. Ron Teerlink, the only remaining former ABN England, has urged consideration of caps which Amro employee on RBS's executive committee, would prevent individual banks from gaining has announced that he will step down from his dominant market shares in the savings and position as head of the bank's business services business loans market. In addition Mr Tucker division in the first half of next year. wants more decentralisation, with a return to local branch managers, and a review of bankers' pay. Daily Telegraph, 8 October 2012 Times, 18 October 2012 16. Concerns that the flotation of RBS's insurance division would be shunned by the City appear to 22. The Chancellor has asked the Parliamentary have been unfounded. The share sale of the Commission on Banking Standards to examine Direct Line Group which includes the brands whether ringfenced banks should be able to offer Churchill, Privilege and Green Flag is close to simple derivatives and to report back by 18 being fully subscribed. December 2012.

Times, 8 October 2012 Financial Times, 15 October 2012

17. The collapse of Spanish house-builder Rivero y 23. The deputy governor of the Bank of England, Paul Soler, which has filed for bankruptcy, has left Tucker, has called for Banks to be restructured to RBS with a loss of £170m. The bank is unlikely to enable them to fail with fewer repercussions. The have to write-off the entire loan and has already objective is to reach a position where "public made substantial provisions for new losses. money is never used for solvency support".

Daily Telegraph, 4 October 2012 Times, 15 October 2012

18.

www.dlapiper.com | 03 24. The British Bankers' Association has established a Independent, 1 October 2012 new task force to look at whether the idea of a banking standards board could restore public faith 30. New proposals outlined by the FSA will in the industry following recent events such as recommend that bankers who try to manipulate Libor fixing and the mis-selling of payment Libor should face criminal prosecutions. Martin protection insurance. Wheatley's proposals to reform Libor also recommend the responsibility for overseeing the Guardian, 15 October 2012 inter-bank lending rate be taken away from the British Banking Association with a new private 25. The Financial Ombudsman Service has announced sector body created to manage the rate setting that it has already received almost 100,000 process. complaints concerning payment protection insurance in the first six months of the current Independent, 1 October 2012 financial year. 31. An investigation is to be launched by the Financial Independent, 11 October 2012 Services Consumer Panel into interest-only mortgages to decide whether customers have 26. In an effort to boost lending, the FSA is to relax grounds to bring claims against banks for mis- capital and liquidity rules relating to new loans selling. which qualify for the Funding for Lending scheme. Times, 27 September 2012

Daily Telegraph, 10 October 2012 32. Figures collected by the Bank of England show that thirteen banks have signed up for the Funding 27. The Chancellor has announced that millions of for Lending scheme. pounds of fines handed out to City firms for abuses, including those for the Libor-fixing Times, 26 September 2012 scandal, are to be channelled into charities supporting the Armed Forces. The new EUROPEAN BANKING arrangement will apply to fines received since 1 April 2012 and the money will be allocated by the DEUTSCHE BANK Armed Forces Covenant Reference Group. In the 33. A former senior corporate broker at Deutsche past fines imposed by the FSA have been used in Bank is one of four people charged with full to meet the running costs of the FSA and to conspiracy to commit insider dealing. The help it reduce the compulsory fees paid by every charges arise from the FSA's Operation Tabernula authorised financial firm in the country. where dawn raids were carried out on 16 The Times, 9 October 2012 properties across London. The alleged £3 million conspiracy took place between November 2006 28. According to a new report by McKinsey, banks and 23 March 2010. will have to focus on cutting costs if they are to stand any chance of making a decent return for Financial Times, 1 October 2012 their investors. If lenders are to hit their return 34. Arco Capital has filed a £37 million lawsuit in the targets, then cost-to-income ratios, which measure US against Deutsche Bank, claiming the the cost of running the business as a proportion of investment bank dumped toxic or distressed loans its earnings, will have to fall from close to 70 per into lending products which were sold to the cent to less than 50 per cent. The average Puerto Rico-based investor prior to the financial European bank has a cost-to-income ratio of 68 crisis. per cent, which will need to fall to 46 per cent for banks to achieve a return on equity of 12 per cent. Financial Times, 1 October 2012

Daily Telegraph, 9 October 2012 UBS

29. The FSA estimates that up to 40,000 complicated 35. UBS CFO Tom Navratil has told Southwark financial products could have been sold to small Crown Court that the bank had to lay off staff and businesses. The FSA arrived at this figure after reduce its bonus pool as a result of unauthorised new information was supplied by the banks. trading by Kweku Adoboli.

04 | Banking & Finance Litigation Update - Issue 57 Times, 16 October 2012 42. The European Parliament has voted in favour of the Commission's proposed curbs on high- 36. UBS could be in line for a tax refund of around frequency trading, commodity speculation and the £50 million after a tax tribunal ruled in its favour ability of banks to run their own trading platforms in a long-running dispute with HMRC over an or trade on behalf of customers using their own offshore tax avoidance scheme. The Upper capital. Tribunal overturned a previous ruling that bonuses received through a Jersey-based vehicle in 2004 Financial Times, 27 September 2012 were subject to tax and national insurance saying that under tax rules in force at the time, the INTERNATIONAL BANKING scheme was "technically sound". BANK OF AMERICA MERRILL LYNCH Times, 1 October 2012 43. Bank of America Merrill Lynch has sold its wealth management arm to Swiss private bank EUROPEAN GENERAL Julius Baer. 37. EU leaders in Brussels have agreed to have the legal framework for the eurozone banking Evening Standard, 10 October 2012 regulator in place by the end of the year and that it will be implemented through the course of 2013. CITIGROUP

Daily Telegraph, 19 October 2012 44. Vikram Pandit, the chief executive of Citigroup, has resigned with immediate effect. The bank has 38. The Financial Times has obtained a paper from just announced Q3 earnings which sent its share the EU Council's top legal advisor which suggests price up by 4.4 per cent. that plans to create a Eurozone banking supervisor may be illegal unless EU treaties are altered: only Guardian, 17 October 2012 in this way could the proposed body be given any legal powers. JPMORGAN CHASE

Financial Times, 18 October 2012 45. JPMorgan Chase's chief executive Jamie Dimon has fulfilled his pledge to "harpoon" the so-called 39. European leaders will meet in Brussels this week "London Whale" after bungled derivative trades, to discuss proposals to harmonise banking costing the bank over $6 billion to date, were supervision across the eurozone. Britain supports closed down. this move as long as it is overseen by the European Central Bank and UK institutions are Times, 15 October 2012 not affected. LEHMAN BROTHERS Times, 15 October 2012 46. Administrators for Lehman's in Europe and the 40. Europe's banks have been told they must build up US have finally reached an agreement after almost more than the €114.7bn in loss-absorbing capital four years of legal wrangling. Former customers which the European Banking Authority originally of the defunct bank are now in line for a pay-out told them they needed. Banks have built up more worth billions of pounds. than €200bn since December 2011 and the EBA Daily Telegraph, 8 October 2012 says this level must be the new minimum.

Daily Telegraph, 4 October 2012 INTERNATIONAL GENERAL 47. As part of a consultation on improving indices 41. A soon to be published independent review of EU like Libor, global financial regulators are banking will propose that banks should pay considering issuing guidance on how those who bonuses in debt, which would be wiped out if an use Libor can make the switch away from the institution fails. benchmark.

Financial Times, 1 October 2012 Financial Times, 2 October 2012

www.dlapiper.com | 05 48. A study by the International Monetary Fund has Further information can be found on the FSA found that there has been little change in banks' website: reliance on wholesale funding markets despite reforms put in place after the financial crisis. http://www.fsa.gov.uk/library/communication/ pr/2012/092.shtml Times, 26 September 2012 51. The PRA's approach to banking supervision PRESS RELEASES The Prudential Regulation Authority has set out 49. Wheatley Review of LIBOR its intended approach towards regulating deposit- takers and investment firms. The Financial Secretary to the Treasury, Greg Clark, has provided a written ministerial statement Financial Services Authority and Bank of on the Wheatley Review of Libor. The Wheatley England, 16 October 2012 Review investigated the attempted manipulation of Libor and made a number of recommendations Further information can be found on the FSA for urgent reform in order to restore confidence in website: the financial services sector. This ministerial statement outlines the government's responses to http://www.fsa.gov.uk/static/pubs/other/pra- those recommendations. The Government has approach-banking.pdf accepted the recommendations in full and will amend the Finance Bill accordingly. The Bill will 52. Sound banking: delivering reform now: bring LIBOR activities within the scope of statutory regulation; create a new criminal offence HM Treasury has published a Command Paper for misleading statements; and give the new which discusses the draft Financial Services Financial Conduct Authority a specific power to (Banking Reform) Bill, focussing on reform of the make rules requiring banks to submit to LIBOR, banking system and promotion of stability and with reference to a Code of Practice. competition through structural and related non- structural measures. HM Treasury, 18 October 2012 HM Treasury, 15 October 2012 Further information can be found on the Treasury website: Further information can be found on the Treasury website: http://www.hm-treasury.gov.uk/d/ wms_fst_171012.pdf http://www.official-documents.gov.uk/document/ cm84/8453/8453.pdf 50. Martin Wheatley sets out the ‘Journey to the FCA’ 53. Sanctioning the Directors of Failed Banks: Response to HM Treasury Consultation The FSA has published a paper, "Journey to the FCA", which sets out how the UK's new financial In its response to the HM Treasury consultation on conduct regulator will operate. The Financial sanctions for the directors of failed banks, the Law Conduct Authority (FCA) will begin work next Society states that the proposed measures year with the remit to make financial markets undermine fundamental and well-established work well so that consumers get a fair deal. principles of justice, and pose significant practical Martin Wheatley, managing director of the FSA difficulties. and chief executive officer designate of the FCA, Law Society, 11 October 2012 said "The FCA offers a huge opportunity for the regulator and firms to start afresh, and work in Further information can be found on the law partnership to reset how we deal with conduct in Society website: financial services. We see it as the role of the regulator to not only make the relevant markets http://www.lawsociety.org.uk/representation/ work well but also to help firms get back to policy-discussion/documents/sanctioning-directors putting their customers at the heart of how they do -of-failed-banks/ business."

Financial Service Authority, 17 October 2012

06 | Banking & Finance Litigation Update - Issue 57 54. Final report on the implementation of Capital senior bankers having part of their bonuses paid in Plans following the EBA's 2011 bonds. Another proposal is that bonus payments Recommendation on the creation of temporary should not be greater than the dividends paid to capital buffers to restore market confidence shareholders, and that the size of bonuses relative to salaries be limited. The European Banking Authority (EBA)'s final report on the implementation of Capital Plans to European Union, 2 October 2012 restore market confidence reveals that 27 banks have implemented direct capital measures since Further information can be found on the Europa September 2011. The majority have increased website: their core capital position by EURO 43.6 billion through the issuance of new ordinary shares, the http://ec.europa.eu/internal_market/bank/docs/high payment of dividends in shares and conversion of -level_expert_group/report_en.pdf hybrids into common capital. 57. Level2 assessments European Banking Authority, 4 October 2012 Three Level 2 reports assessing the rules that will Further information can be found on the EBA implement Basel III in the EU, Japan and the US website: have been published by the Basel Committee on Banking Supervision. http://stress-test.eba.europa.eu/ capitalexercise2012/ Bank for International Settlements, 1 October Finalreportrecapitalisationexercise.pdf 2012

55. Banking partnerships to benefit growing Further information can be found on the BIS businesses website:

The UK Government is to partner with Metro http://www.bis.org/bcbs/implementation/l2.htm Bank to help boost growth prospects for small and -medium sized enterprises (SMEs). The bank will 58. Strengthening defences: tackling financial support up to £100 million of lending for eligible crime from the regulator’s perspective businesses in London and the South East that are In a speech to the British Bankers' Association the signed up to GrowthAccelerator, a Government- director of enforcement at the FSA, Tracy backed coaching service available to businesses McDermott, has announced a review of banks' with potential for rapid and sustainable growth. controls aimed at identifying international RBS Natwest has also agreed to promote the commercial crime. service across its nationwide network to its UK SME customers. Financial Services Authority, 28 September 2012

Department for Business, Innovation and Skills, 3 Further information can be found on the FSA October 2012 website:

Further information can be found on the BIS http://www.fsa.gov.uk/library/communication/ website: speeches/2012/0926-tm.shtml

http://news.bis.gov.uk/Press-Releases/Banking- 59. CEO appointed at UK Green Investment Bank partnerships-to-benefit-growing-businesses- 6810f.aspx The newest executives to be appointed to the UK Green Investment Bank (UK GIB) have been 56. High-level Expert Group on reforming the named by the Business Secretary, Vince Cable. structure of the EU banking sector: final Shaun Kingsbury has been appointed as the Chief report Executive, along with six other Non-Executive Directors The final report of the Liikanen committee set up by the European Union contains proposals to force Department for Business, Innovation and Skills, 28 banks to separate their risky trading activities September 2012 from their high street operations. The report also contains a number of other proposals, including

www.dlapiper.com | 07 Further information can be found on the BIS Further information can be found on the BofE website: website:

http://news.bis.gov.uk/Press-Releases/CEO- http://www.bankofengland.co.uk/publications/ appointed-at-UK-Green-Investment-Bank- Pages/news/2012/090.aspx 680bd.aspx 63. General guidance on proportionality: The 60. EBA publishes results of the Basel III Remuneration Code (SYSC 19A) & Pillar 3 monitoring exercise as of 31 December 2011 disclosures on remuneration (BIPRU 11)

The European Banking Authority (EBA) has This Financial Services Authority guidance published its second report into the Basel III statement, which has effect from September 25, monitoring exercise. It presents the aggregate EU- 2012, sets out its approach to implementing the wide results for capital, risk-weighted assets Remuneration Code and the Pillar 3 remuneration (RWAs) and leverage and liquidity ratios. Group 1 disclosure rules. It further clarifies how firms may banks showed an estimated €8 billion shortfall. comply with the Code and disclosure rules in a manner that takes account of their size, internal European Banking Authority, 27 September 2012 organisation and the nature, scope and complexity of their activities. Further information can be found on the EBA website: 1Financial Services Authority, 25 September 2012

http://www.eba.europa.eu/cebs/media/ 2Further information can be found on the FSA Publications/Other%20Publications/QIS/EBA-BS website: -2012-xxx--Public-ISG-Report-Basel-III- Monitoring-.pdf 3http://www.fsa.gov.uk/static/pubs/guidance/fg12 -19.pdf 61. Most complained about firms products revealed CASE LAW The FSA has published the latest data showing 64. Borrower succeeds in judicial review of FSCS complaints against financial firms and the most compensation award complained about financial products during the first half of 2012. A borrower ("E") successfully challenged a decision of the Financial Services Compensation Financial Services Authority, 26 September 2012 Scheme Limited ("FSCS") to award her only £11,522.98 in a claim relating to negligent Further information can be found on the FSA mortgage advice. website: E had been advised to re-mortgage, replacing an http://www.fsa.gov.uk/consumerinformation/ existing repayment mortgage (with a modest if_things_go_wrong/latest/complaints-data balance) with a new, much larger, interest only mortgage and to invest the extra money raised in a 62. Developments in financial markets, monetary Spanish property development. The aim was that and macroprudential policy the income and capital from the Spanish property would service and eventually pay off the mortgage Paul Fisher, the Bank of England's Executive with cash to spare. Director for Markets and member of both the Monetary Policy Committee and the Financial The venture was a disaster. The property Policy Committee, has given a speech on the development was never finished and the condition of financial markets and on aspects of developers went into liquidation. E was saddled monetary and macroprudential policies. He also with a much larger interest only mortgage which discussed the background to the Funding for she had no means of paying off as she did not Lending Scheme, coinciding with the release by have the income or means to do so. the Bank of the list of participating groups that have signed up to the Scheme so far. It was common ground that the advice had been negligent. Bank of England, 25 September 2012

08 | Banking & Finance Litigation Update - Issue 57 The FSCS had approached the claim on the basis shareholdings in Usarel. The Bank did not accept that it had both "protected" and "unprotected" this declaration of shareholdings or that corporate elements. It claimed that it could only compensate directors of Usarel had been validly appointed. It for losses arising directly from the unsuitable sought to overturn the Cypriot judgment. That regulated mortgage contract which had been action was ongoing in Cyprus. recommended and not for losses arising from the Spanish property purchase. The corporate directors of Usarel instructed Edwin Coe solicitors to act for Usarel in the English The court held that this approach was wrong. The proceedings. Not recognising the validity of the negligent advice should have been regarded as an appointment of these corporate directors, the Bank indivisible package, it was mortgage advice which suggested that Edwin Coe might be acting without included investment advice (the latter being an authority. essential element of the former, because without it the mortgage was not feasible). If this issue could not be resolved, Edwin Coe would have to come off the record, leaving Usarel If a mortgage is unsuitable because the borrower without representation and at the risk of cannot afford it, the borrower's loss will be the substantial injustice. The corporate directors and obligation which she/he has assumed which she/he other entities which had been recognized as is unable to afford. shareholders in Usarel by the Cypriot court issued an application in the English proceedings for an It was "essential" in order to achieve fair order appointing an individual as litigation compensation for FSCS to compensate E for the receiver of Usarel for the purposes of defending unaffordability of the mortgage itself since this the Bank's claim. was the very reason why the financial adviser had been in breach of the suitability requirements in The Bank claimed that the English court had no the Mortgage and Home Finance: Conduct of jurisdiction to make such an order and that the Business Sourcebook ("MCOB") 4.7.2.R. Cypriot court had exclusive jurisdiction over this matter pursuant to Art 22 of the Judgments FSCS's award was flawed and irrational. It did not Regulation. Alternatively even if the English court represent "fair compensation" because it bore no did have jurisdiction, Cyprus would be the most relation to reality and E's true loss as a result of appropriate court to make such an order. the negligent mortgage advice. It took no account of the reason why the interest only mortgage was The English court ruled that the rules on unsuitable, namely its unaffordability. jurisdiction set out in the Judgments Regulation were not engaged here as the applicants were not The FSCS's award was quashed and the FSCS seeking to sue the Bank. The application before directed to reconsider the question of the court did not amount to "proceedings" within compensation. Art 22. The Bank had commenced proceedings against various defendants and there was no Charmaine Emptage v Financial Services dispute that the English court had jurisdiction over Compensation Scheme Limited, 11 October 2012 those proceedings. The application was made within those proceedings. 65. Litigation Receiver appointed to give instructions in substantial fraud claim The court had the power to appoint a receiver where it was just and convenient to do so pursuant JSC BTA Bank ("Bank") brought a substantial to s.37 of the Senior Courts Act 1981. The fraud claim against various defendants. It claimed appointment of a receiver here was just and that it had advanced US $120m to one defendant, convenient as it would ensure that Usarel would be Chrysopa Holdings BV, but that this transaction represented at trial by solicitors and counsel. It had had been a sham designed to disguise the transfer to be in the interests of justice that a defendant in a of that money to entities owned or controlled by very large fraud claim should be represented at one of the other defendants, Mr Ablyazov. The trial. Bank claimed that another defendant, Usarel Investments Limited ("Usarel"), was mixed up in There was no risk of conflict between the English the alleged fraud. court the Cypriot court. If the Cypriot court were to confirm its earlier decision, then Edwin Coe In separate proceedings in Cyprus the Cypriot would have had authority to act all along. court had made a declaration as to the Alternatively, if the Cypriot court did not confirm

www.dlapiper.com | 09 its earlier decision, then the appointment a receiver for the purpose of instructing Edwin Coe would not be inconsistent either. There was no risk of irreconcilable judgments in different states.

Appointment of a receiver in the present case was being sought for a particular and very limited purpose, namely, to ensure that Usarel was legally represented in English proceedings. The English court was not seeking to resolve a dispute which undoubtedly existed as to the internal management of Usarel. That dispute was before the Cypriot court. All the English court wanted to ensure was that, no matter how the dispute as to internal management was resolved, Usarel should be represented at the trial shortly to take place in England.

Although the application was made very late in the day it had not been suggested that the delay had prejudiced the bank. The appointment was therefore made.

JSC BTA Bank v Ablyazov & Others and Vetabet Holdings Limited, Med Consulting Limited, Evoru Holdings Limited, Dube Overseas Limited, Polatia Holdings Limited and Liberati Worldwide Inc, Commercial Court, 8 October 2012

10 | Banking & Finance Litigation Update - Issue 57 This bulletin is intended as a general overview and discussion of the subjects dealt with. It is not intended, and should not be used, as a substitute for taking legal advice in any specific situation. DLA Piper UK LLP will accept no responsibility for any actions taken or not taken on the basis of this publication. If you would like further advice, please contact:

LEEDS: HUGH EVANS T 0113 369 2200 [email protected]

LONDON: JEAN-PIERRE DOUGLAS-HENRY T 020 7153 7373 [email protected]

MANCHESTER: STEWART PLANT T 0161 235 4544 [email protected]

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. DLA Piper UK LLP and DLA Piper SCOTLAND LLP will accept no responsibility for any actions taken or not taken on the basis of this publication. If you would like further advice, please contact Hugh Evans (Leeds) T: 0113 369 2200, E: [email protected] or Jean-Pierre Douglas-Henry (London) T: 020 7153 7373 E: [email protected] or Stewart Plant (Manchester) T: 0161 235 4544, E: [email protected] on 08700 111 111. www.dlapiper.com

DLA Piper UK LLP is authorised and regulated by the Solicitors Regulation Authority. DLA Piper SCOTLAND LLP is regulated by the Law Society of Scotland. Both are part of DLA Piper, a global law firm operating through various separate and distinct legal entities. For further information please refer to www.dlapiper.com UK switchboard: +44 (0) 8700 111 111 Copyright ©2012 DLA Piper. All rights reserved. | NOV12 | Ref: LONDP/MA/14556537.1