High Court Grants Permission To Plead Fraud In LIBOR Claim

In the latest decision regarding LIBOR claims (Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2015] EWHC3272 (Ch)), Property Alliance Group Ltd (PAG) has been allowed to amend its Particulars of Claim against The Royal Bank of Scotland (RBS) to include a plea for fraudulent misrepresentation.

Background

PAG, a property developer, entered into four interest rate swap contracts with RBS between October 2004 and April 2008. This was to hedge the interest due under various loan facilities with RBS. Each of the swaps used GBP LIBOR as a reference rate. LIBOR is the rate at which banks are able to borrow funds from one another, and is set by banks making daily submissions on rates to the British Bankers Association. PAG brought a claim against RBS alleging that RBS mis-sold the swap contracts which amounted to a misrepresentation and breach of contract.

Following disclosure PAG sought to amend its Particulars of Claim to include a plea for fraudulent misrepresentation. It has been recognised by commentators that cases alleging LIBOR manipulation may encounter difficulties in calculating damages. Permission to plead fraudulent misrepresentation could therefore diminish this problem. This is because the court would have discretion to order rescission (restoring parties to the position before the contracts were entered into) and...