Commercial Court dismisses ECU claims against HSBC entities due to limitation

18 July 2022. Published by Simon Hart, Partner, Head of Banking & Financial Markets Disputes and Jake Hardy, Partner

The Commercial Court has provided a timely reminder of the importance of limitation periods, along with the application of the law of causation in the context of claims that relate to foreign exchange markets.


The ECU Group Plc (ECU, the Claimant), an investment firm that specialises in currency risk management, managed loan facilities in several currencies for its clients who had loans with a wide array of banks, including HSBC. The Claimant monitored the various currencies and would issue instructions for HSBC to change or "switch" the currency exposure of the loan facility either by way of 'market order', which required an immediate switch of currency, or by way of 'stop-loss order' which was an order which would only be triggered upon the FX spot rate reaching a particular point. 

The claim arose out of a series of incidents that occurred between 2004 and 2006. ECU alleged that entities within the HSBC group (HSBC parties, the Defendants) had been responsible for manipulating the interbank spot foreign exchange (FX) rate in order to trigger stop-loss orders which had been placed by ECU in connection with their management of their clients’ mortgage debts under their multi-currency facilities with HSBC's UK private bank, HBPB. 

ECU asserted that the HSBC parties’ FX traders engaged in widespread and systematic misconduct by ‘front-running’ client orders based on knowledge of ECU’s trigger rate, resulting in increased profits for HSBC ("front running claims"). ECU also alleged that HSBC was working ahead of its instructions in order to make additional profits ("trading ahead claims"). ECU further alleged that the HSBC entities wrongfully added a margin to the rate provided to ECU which caused loss to ECU ("margin claims"). Finally, ECU asserted that HSBC entities breached duties of confidence allegedly owed to ECU by misusing its confidential information ("confidence claims").

In its defence, the HSBC parties argued that the claims were limitation barred; that evidence from the time showed ECU consciously elected not to pursue any claims following an exchange of correspondence with HSBC in 2006; that any alleged wrongdoing did not cause ECU or ECU’s clients any loss; and that no wrongdoing took place in any event (The ECU Group Plc v HSBC Bank UK Plc [2021] EWHC 2875 (Comm)).  ECU's position on the limitation defence of HSBC was that it was not in a position to discover the relevant facts prior to 4 February 2013.


On 1 November 2021, following a seven-week trial, Mrs Justice Moulder dismissed all claims on the grounds of limitation. 

In relation to the front running and trading ahead claims, the Court held that the limitation period had expired because ECU had been in a position to set out the majority of its claims in 2006, when it had filed a formal complaint to the HSBC parties in relation to three stop loss orders. Accordingly, the Court concluded that ECU had sufficient knowledge in 2006 to plead the front running and trading ahead claims in relation to three trades which had taken place in January 2006. Accordingly, the clock started running for the purposes of the Limitation Act 1980 in 2006.

As regards the confidence claims advanced by ECU, the Court held that ECU could with reasonable diligence have discovered sufficient material to plead its case at around the same time, had it taken appropriate steps.

Despite finding that ECU's claims were time-barred, the Court went on to analyse whether ECU or its clients had suffered any loss from the alleged wrongdoing. The Court held that any alleged wrongdoing had not caused ECU or its clients any loss, because ordinary market movements would in any event have triggered the majority of the stop loss orders.
Finally, in relation to five transactions where the evidence suggested that the Defendants' activity might have possibly affected the date on which the stop loss order was triggered, the Court held that no deliberate wrongdoing had in fact taken place. In this respect, expert evidence was of crucial importance as the Court gave preference to the Defendants' expert evidence. In particular, the Court considered that cross-examination of ECU’s expert gave rise to considerable misgivings about the reliability of the opinions he expressed in his reports and concern that he had not sought to present the Court with "a balanced view of the possible (and likely) conclusions" that could properly be drawn from the available data. The Court also rejected ECU's assertion that there was a "culture of widespread misconduct" at HSBC which contributed to the loss, as being both unpleaded and lacking any real evidential basis. 

The Court stated that the margin claims would have been dismissed irrespective of limitation. It reasoned that the Defendants were entitled to add a margin for commercial reasons, and they had not been wrong to do so.


This judgment is one of many recent judgments on s.32 of the Limitation Act 1980, on this occasion in the context of FX markets. The facts were particularly problematic for the claimant, as it had shown sufficient awareness of the claim it eventually pleaded to make a complaint to the defendant before the relevant date for limitation.  It is also pertinent that it had a sufficient basis when it did take action to establish a basis for pre-action disclosure against HSBC.  Against that backdrop, the conclusion that it could have pleaded its case before the limitation date was perhaps quite hard to resist. 

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