Dispute resolution and derivatives

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Dispute resolution and derivatives
  • Common categories of derivative disputes
  • Mis-selling claims
  • Interest rate hedging products mis-selling claims
  • Interest rate hedging products mis-selling claims—example cases
  • Capacity claims
  • Foreign municipality claims
  • Corporate capacity claims
  • Termination disputes
  • Failure to give proper notice
  • More...

Dispute resolution and derivatives

The nature, main types and main uses of financial derivatives are summarised in Practice Notes: The nature of financial derivatives and Types of derivatives. Derivative contracts frequently give rise to disputes between the parties that enter into them. This Practice Note discusses:

  1. the common categories of disputes that arise from derivative contracts

  2. relevant case law relating to those categories

  3. tips for practitioners when drafting derivative contracts on avoiding future disputes, and

  4. modes of dispute resolution available for resolving derivatives contract disputes

Common categories of derivative disputes

Derivatives can give rise to a range of disputes. In common with any scenario in which parties negotiate, enter into and perform (or fail to perform) a contract, claims may arise, for example:

  1. for negligent misstatement, deceit or breach of section 2 of the Misrepresentation Act 1967 (MA 1967) in relation to false or misleading statements made prior to entry into the contract (for more information, see: Misrepresentation, misstatement and other claims in banking and finance—overview)

  2. for breach of contract in relation to any failure by either party to comply with its obligations under the derivative contract (for more information, see Dispute Resolution Overview: Terminating contracts—how and when a contract ends—overview.

  3. other contract law-based claims alleging frustration, mistake, duress, undue influence, incapacity, non est factum, absence of offer and acceptance, absence of consideration, illegality or other generally

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