Framing the arguments around swaps mis-selling

Framing the arguments around swaps mis-selling
Are we beginning to see some clarity in the court’s approach to swaps mis-selling claims? Following the High Court decision in Bailey v Barclays Bank, Paul Choon Kiat Wee, a barrister at 3 Verulam Buildings, points out that as the case law on swaps mis-selling evolves, the proper boundaries of the arguments available to claimants and defendants alike become clearer.

Original news

Bailey v Barclays Bank plc [2014] EWHC 2882 (QB), [2014] All ER (D) 151 (Aug)

The claimant, Mr Bailey, had arranged a loan with the defendant bank. He subsequently sought to transfer the loan from himself to a company that he controlled (MTR). Mr Bailey and the company brought proceedings against the bank for, among other things, misrepresentation. In the course of proceedings, the bank sought to strike out the claim, and the claimants sought permission to amend the particulars of claim. The Queen’s Bench Division held that the application to amend would be dismissed, and judgment would be given for the bank.

What issues did this case raise?

This judgment (on MTR’s application for permission to amend its particulars of claim, and on the defendant bank’s application for strike out and summary judgment) concerned the sustainability of several claims advanced by MTR in relation to the alleged mis-selling of an interest rate swap, which had originally been sold to Mr Bailey, MTR’s owner, in 2007 and later novated to MTR itself in 2011. The swap had originally been purchased by Mr Bailey in 2007 in connection with borrowings from the bank in his own name. In 2011, Mr Bailey sought to transfer his borrowings with the bank to MTR. The bank informed Mr Bailey that in order to do this, the swap would either need to be novated to MTR, or terminated early with breakage fees of $560,000. Mr Bailey alleged that his preference had been for the swap to be terminated, but that in view of

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About the author:
Kathy specialises in restructuring and cross-border insolvency. She qualified as a solicitor in 1995 and has since worked for Weil Gotshal & Manges and Freshfields. Kathy has worked on some of the largest restructuring cases in the last decade, including Worldcom, Parmalat, Enron and Eurotunnel.