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LIBOR Manipulation – The High Court rejects claim

The High Court has recently given judgment in the first major case on the manipulation of the London Interbank Offered Rate (LIBOR) to come to trial.

Whilst principally concerned with LIBOR, the court’s ruling has some interesting points of more general application:

  1. The judge's approach to the misrepresentation claims confirmed that in such cases so much turns on the specific facts of the case and analysis of who said what and how that was interpreted by the parties;
  2. The court's refusal to imply a good faith obligation into a contract between sophisticated commercial parties, which had been negotiated at arm's length and which contained express terms excluding any fiduciary or equitable duties.

For the claimant’s misrepresentation claims to succeed it had to prove that representations were made to it; that it understood the representations to have been made; that the representations were false; that it was induced by the representations to enter into the contracts (and the defendant intended to induce it to do so); and that the claimant was not prevented by the terms of the contract from making the claim.

The Court said that the representations would only have been made fraudulently if the relevant person knew that they were being made and were intended to be understood in the misleading sense and also that he knew or was reckless as to whether they were false.

In deciding against the claimant the court said it was important to consider the alleged misrepresentations in their factual context, and in the light of the contractual relationship between the claimant and the defendant. The court found that the representations came within the "non-reliance" clause in the contract, being either investment advice or a recommendation. The claimant was contractually unable to rely upon them. The claim therefore failed.

Please contact James Staton, Partner, Dispute Resolution, for further details.

About the Author

James Staton


James is a Partner and Head of the Dispute Resolution team and primarily handles commercial…

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