Finance litigation update - July 2022

FINANCE LITIGATION UPDATE – JULY 2022 7 Limitation on summary determination: Libyan Investment Authority v Credit Suisse & Ors In Libyan Investment Authority ("LIA") v Credit Suisse International ("Credit Suisse") & Ors12 the court considered the scope of s32 of the Limitation Act 1980 (the "Act") and the suitability of disputed issues of actual or constructive knowledge for summary determination. In particular, the court considered when the LIA (acting with reasonable diligence) would have been "triggered" to investigate matters and what a reasonably diligent investigation would have revealed. In yet another judgment in a recent run of cases on this complex area of law, the court in this case concluded that, had the LIA acted with reasonable diligence, it could have brought its claim within the primary limitation period. On that basis, it awarded summary judgment in favour of Credit Suisse and GLG Partners Asset Management Ltd (the second defendant) ("GLGP") and set aside the orders permitting service out of the jurisdiction in respect of the other defendants. Background The LIA's claims related to its investment, in June 2008, in US$200 million of notes issued by Credit Suisse. The notes had 90% capital protection upon maturity and their return tracked the performance of a fund managed by GLGP. Credit Suisse paid GLGP US$6 million shortly after the notes were issued, and GLGP then made a payment in the same amount to Lands Company Limited ("LCL"). 12 [2021] EWHC 2684 (Comm) The notes were restructured in June 2009, linking them to the performance of different funds, including funds managed by Frontier Investment Management Partners Ltd ("FIMP") whilst removing their 90% capital protection. Credit Suisse paid US$6 million to FIMP shortly after the restructuring, and the LIA alleged that FIMP then made a payment in the same amount to Walid Al-Giahmi (who was said to control and/or be the ultimate beneficial owner of LCL). The LIA alleged that the payments made to LCL and to Mr Al-Giahmi were in return for fraudulent and corrupt services provided by Mr Al-Giahmi to Credit Suisse and/or GPLG in respect of the original notes, and to Credit Suisse and FIMP in respect of the restructured notes. Those alleged services included the bribing or intimidating of at least three LIA officials. The LIA claimed that the notes were voidable (for breach of fiduciary duty and/or undue influence) and/or unenforceable (for illegality). The litigation follows proceedings brought by the LIA against other banks in relation to its international investments, with two of such proceedings - against Société Générale and JP Morgan Chase - involving similar allegations against Mr Al-Giahmi. The claim against Société Générale settled prior to trial in 2017. In the JP Morgan proceedings, the claims against LCL and Mr Al-Giahmi were held to be statute barred, and the claim against JP Morgan later settled. The judgment handed down by HHJ Pelling QC on 3 December 2021 relates to applications by Credit Suisse and GLGP for summary judgment against the LIA, with both of those parties arguing that the LIA's claim had no real prospect of success because it was statute barred. The judgment also deals with applications by the third to fifth defendants to set aside orders (i) extending the validity of the Claim Form and (ii) granting permission for the proceedings to be served out of the jurisdiction. Limitation principles Where a limitation defence is raised in support of an application to set aside service out of the jurisdiction, the test is the same as the summary judgment test itself. All of the applications therefore faced the same hurdles.