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Banking and Financial Litigation Markets Update - Spring 2023

Published on 06 March 2023

This update is brought to you by RPC’s top tier banking and financial markets disputes practice in London, with specialists in all areas of financial markets litigation (and arbitration) and a wealth of expertise including frequent involvement in the most complex, high-value, and high-profile disputes in the sphere. Here, we take a look at some of the most important judgments in recent months.


The highest profile topic in this area is still the scope of the Quincecare duty, ie the duty of a bank to refrain from acting on a payment instruction and to make inquiries when it is on notice of a serious possibility of fraud. Originally developed back in 1992, the first half of last year saw several judicial developments in this area, which we covered in detail in our last update. However, many questions still remain. Since last summer, the Supreme Court has considered the duty in an insolvency context in Stanford International Bank Ltd v HSBC Bank PLC. The majority held that it did not need to examine the scope of the duty as it found that no loss had occurred, so that examining any Quincecare claim was unnecessary. However, in a dissenting judgment Lord Sales made interesting observations when examining the scope of the duty. While he thought that the duty must remain within “proper bounds”, he did not rule out a Quincecare claim against a bank where the company whose funds are to be paid out is in a situation of “hopeless insolvency”, even if in practice this might be a relatively rare occurrence.

Looking ahead, we will receive more guidance from the Supreme Court which in February 2023 heard the appeal in Philipp v Barclays Bank UK Plc. This concerned a case where a customer themselves authorised a payment instruction to a fraudster in an authorised push payment fraud. We consider this in more detail below.

We also look back at the market disruption in Autumn 2022, both in the gilts and FX markets, and consider the related litigation risks in these areas.

Italian local authorities continue to litigate in the High Court (see also our last update). We take a look at two significant decisions concerning English law governed interest rate swaps which have been handed down since the summer of 2022, one of which constituted the first ever victory for an Italian local authority in this context. It remains to be seen whether this outcome could embolden other local authority claimants.

Elsewhere, the courts have been clarifying two interesting aspects arising out of ISDA agreements and events of default. One decided that an ISDA default notice need not be completely accurate in order for it to be valid. The other considered the meaning of continuing events of default in the context of the collapse of Lehman Brothers. The result was that payments suspended more than 14 years ago following the collapse were now due from counterparties of certain interest rate swap transactions. While these decisions do not convey any particular trend, they are very useful clarifications of these technical points.

We also take a look at a couple of case management decisions which were particularly notable. One found that Argentina’s confidentiality obligations to the International Monetary Fund did not override the duty of disclosure. In the other, the court rejected an application for a group litigation order which was sought in the context of an investor claim as it would not further the Overriding Objective.  

Funding also remains a live topic in the financial services litigation context. We take a look at a Commercial Court decision where it was held that a litigation funder was jointly and severally liable for the defendants’ costs from a date prior to the litigation funding agreement, and despite the involvement of other funders (The ECU Group plc v HSBC Bank Plc & ors).

In the latest instalment of the long running legal battle between Deutsche Bank, Sebastian Holdings Inc and Alexander Vik, the Commercial Court found Mr Vik to have been in contempt of court for deliberately giving false evidence and withholding documents he was obliged to disclose.

Fraud (outside of Quincecare duty considerations) of course also remains a live topic in the financial services realm. We consider a decision in a bribery claim concerning bonds, where the Court of Appeal provided a useful illustration of bribery principles which arose due to of a conflict of interest and lack of informed consent, rather than any proven dishonest conduct.

In an unusual case, the High Court considered a rare application for recusal of a judge due to apparent (not actual) judicial bias, which related to a judge’s ownership of a yoga studio and related bank loan.