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Banking and Financial Services Litigation

PCB Litigation is a conflict-free firm, which, unlike the majority of prominent City dispute resolution departments, is able to act against all of the major UK banks. At the same time, we are able to draw upon our experience of acting for large foreign banks, for whom we have acted extensively in fraud and global asset recovery cases.

Our work is recognised by the Legal 500, which ranks PCB as a leading firm in banking litigation. The Legal 500 recommends Anthony Riem, Trevor Mascarenhas and Jon Felce, with Jon being singled out as a Next Generation Partner.

ACTING AGAINST UK BANKS

When faced with significant claims and counterclaims, the major UK banks will often turn to the litigation practices of top City firms, and will be prepared to throw significant resources to “break” their opponents. PCB is one of the few firms who do not have conflicts in acting against those banks and who are equipped to take on such heavyweight litigation, and to do so cost-effectively.

We have been instructed on claims against banks relating to:

  • Mis-selling

  • Deceit

  • Breach of regulations

  • Unfair conduct

  • Money-laundering

  • Knowing receipt of stolen funds

ACTING FOR BANKS

Described by The Times as “solicitors to the banking community”, our primary work for banks has been the recovery of very substantial bad loans, ranging from a few million dollars to hundreds of millions of dollars. Some claims have been against the debtors direct, others have been against guarantors or against individuals alleged to have fraudulently procured the lending. This has often involved asset recovery on a multi-jurisdictional basis, involving freezing and receivership orders.

In addition, PCB has acted for banks in cases involving:

  • A dispute between an investment bank and the Jersey Financial Services Commission regarding a €1bn real estate fund

  • The question of whether a bank, which had pursuant to a participation agreement passed on the whole of the risk of non-payment of a loan, had nevertheless suffered loss for the purposes of pursuing tort claims in respect of that lending

  • The removal of copycat websites

  • Mortgage repossessions

Selected Case Summaries

PCB acted for the Deposit Insurance Agency, the state liquidator of the collapsed Vneshprombank LLC (“VPB”) in successfully obtaining a £1.34billion worldwide freezing order and associated search order against Georgy Bedzhamov. He, together with his sister, Larisa Marcus, the former President of VPB, is alleged to have committed one of the largest banking frauds in Russia resulting in VPB’s collapse. Following the granting of the worldwide freezing order and search order there were a series of hearings in relation to a number of heavily disputed applications. These included an application by Mr Bedzhamov for an extension of time to make an application to vary or discharge the worldwide freezing and search orders. VPB opposed this application on the basis that the Court had given previous extensions of time to Mr Bedzhamov and the last minute manner in which he had made this application for a further extension. At a hearing on 22 May 2019, Mrs Justice Falk agreed and took the highly unusual step in a case of this magnitude of refusing the extension therefore halting any attempt by Mr Bedzhamov to have either the worldwide freezing order or associated search order discharged or varied.
This is a longstanding matter where PCB has acted for JSC VTB Bank (“VTB”) against Pavel Skurikhin who had given personal guarantees for loans made by VTB to his business. The business defaulted on the loans. VTB commenced proceedings and obtained judgments against Mr Skurikhin in the Russian Court. In 2014, it obtained judgments against Mr Skurikhin in the English Commercial Court to the value of approximately £20 million. These judgments are based on the common law claims arising from the Russian judgments. By way of enforcement in July 2015, VTB successfully obtained an order for the appointment of Receivers over the membership interests in an English registered LLP that owns three properties based in Italy used and occupied by Mr Skurikhin and members of his family. Although the membership interests were held for the benefit of a Liechtenstein Foundation, Berenger, the Court was satisfied that Mr Skurikhin had sufficient control of the Liechtenstein Foundation that he could be treated as the owner of membership interests in the LLP and it could be said that they were assets available for enforcement. The Court Receivers subsequently used their powers to place the English registered LLP into administration and have themselves appointed as Administrators so that they were in a position to realise its assets, particularly the three properties in Italy. Three years later in July 2018, Berenger issued an application challenging and seeking a discharge of the Receivership Order on the basis that it is not in the control of Mr Skurikhin. VTB successfully opposed the application having previously obtained orders for disclosure from and cross-examination of the Swiss fiduciary and local director who set up and managed Berenger. In a judgment dated 12 June 2019, Patricia Robertson QC (sitting as Deputy High Court Judge) dismissed the application to discharge the order for the appointment of Receivers. She considered that the discharge application was an abuse of process given that the evidence relied upon for seeking to oppose the appointment of Receiver was available to Berenger at the time of the hearing in July 2015 and it had the opportunity to deploy that evidence against the application at that hearing.

PCB acted for private equity firm ACON in a claim for a US$4m payment upon exiting its investment in an energy company. ACON had been part of a consortium of private equity firms that had invested, but was unhappy with the way in which its fellow investors wished to manage the company. It therefore negotiated an exit which involved the return of its US$100m investment and an additional payment of US$4m on the fulfilment of a condition that the energy company would not suffer a penalty from its lenders. The defendant claimed that the condition was not fulfilled saying that certain terms that the lenders had imposed upon the energy company amounted to a penalty within the meaning of the condition. PCB succeeded in persuading the Court that the interpretation of the condition contended for by the defendant was wrong, and obtained judgment for US$4m.

PCB acted for Mr Walid Giahmi in successfully challenging the jurisdiction of the English court. The case was one of a series of claims and threatened future claims against Mr Giahmi and a number of major Western banks, alleging that investments were made by the Libyan Investment Authority (“the LIA”) with those banks due to Mr Giahmi paying bribes to LIA employees. PCB persuaded the Court that the LIA had seriously breached its duty of full and frank disclosure when it obtained permission to serve him out of the jurisdiction, in particular because it had failed to draw the Court’s attention to the relevant test for limitation and the related evidence tending to show that the LIA could not satisfy that test. Indeed, the Court was persuaded that the LIA had no reasonable prospect of satisfying the test and the claims were therefore time-barred.
PCB’s defence on behalf of 33 respondents to a €1bn claim culminated in PCB’s clients being awarded indemnity costs. The Claimants’ case had collapsed after 4 days of a 6 week trial, but the Judge considered he was in a position to assess in broad terms the reasonableness of the pursuit and the manner of presentation of the proceedings, to determine in all the circumstances already apparent to the Court whether the case was such as fairly and properly to be characterised as “out of the norm”. He concluded that this had been high-risk litigation, aggressively and very expensively pursued and that it was taken out of the norm by factors including (1) the pursuit of serious allegations of commercial impropriety which were suddenly abandoned without explanation; (2) the changing nature and inconsistencies in the case; and (3) the publicity attending the case.  
PCB acted for the claimant bank in obtaining a judgment in excess of US$180 million against the Defendant after a 4 week trial. The claimant established that the defendant had deliberately misled the bank into lending monies to a borrower as a result of the unlawful acts of the defendant, who held the majority beneficial interest in the borrower through a Netherland Antilles Foundation. The Court also found that the defendant had dissipated the assets of the group companies of which the borrower formed part and which had guaranteed the loan. This was notwithstanding the absence of any direct documentary evidence demonstrating the defendant’s involvement in the manipulation of accounts upon which the claimant had relied when granting the loan or the application made to the claimant for the loan.

PCB acted for the defendant in this long running mutli-million dollar dispute arising out of two actions. The Court had to determine whether liabilities owed to Mr Al Refai from the first action should be set off against liabilities for costs he owed to the bank in the second action or against a liability to pay a Bahraini judgment debt to the bank. The bank sought the former, whilst Mr Al Refai sought the latter. It was common ground that this was a matter for the Court’s discretion, and that discretion was ultimately exercised in favour of Mr Al Refai given that it was important to him to have the Bahraini judgment debt discharged, as that debt could be used to have him imprisoned in Kuwait.

PCB acted for the claimant, who had been defrauded of substantial sums of money by being persuaded to transfer money into a bank account belonging to an unknown person. He was granted Norwich Pharmacal relief to obtain information about the account holder and what had happened to his funds. He was granted declaratory relief in relation to the traceable proceeds of the fraud. The Court was satisfied that the evidence showed that it was strongly arguable that a fraud had been carried out and it was in the public interest for the relevant bank to provide the information necessary for the owner of the bank account to be identified because of the conduct alleged.

PCB acted for the claimant bank seeking to enforce Russian judgments in the sum of approximately £150m against the defendant. A worldwide freezing order had been obtained by PCB and we were able to demonstrate that the asset disclosure provided had been unsatisfactory. Applying the principles in Jenington v Assaubayev (another successful PCB case on cross-examination), the Court concluded that this was an appropriate case for the defendant to be cross-examined on his asset disclosure.

PCB acted for the second defendant to a claim to enforce a charge granted over a house. The claim was defended on the basis that the charge amounted to a regulated mortgage contract which the claimant was not licensed to provide, that the charge was void under s284 of the Insolvency Act 1986 and that it had been procured by undue influence and that the house was in any event held on trust for the defendants’ daughter. The second defendant counterclaimed for a declaration that the charge was unenforceable, void or voidable and for it to be set aside. The claimant failed to file a defence to the counterclaim and judgment in default was granted, setting aside the charge and declaring it void. PCB successfully opposed an application to set aside the default judgment.

PCB acted for the claimant bank seeking to enforce Russian judgments in the sum of approximately £150m against the defendant. The bank applied for summary judgment and in response the defendant sought to allege that the Russian judgments had been procured by fraud and/or should not be enforced on grounds of public policy. Following lengthy factual and expert evidence, PCB were able to persuade the Court that there was the defence was contrived and had no real prospect of success. Summary judgment was granted in favour of PCB’s client.

PCB acted for the claimant bank. The bank alleged unlawful means conspiracy to defraud the bank by the diversion of assets to companies controlled by the defendant. The bank sought to amend its claim to allege that it had been induced by fraudulent misrepresentations to make loans to companies of US$150m. The defendant resisted the amendment and sought to strike out the claim or have it summarily dismissed, on the basis that the primary facts alleged by the bank were insufficient. PCB successfully resisted the defendant’s application and was granted permission to amend its claim, on the basis that the claim in fraud could be pleaded on the basis of inferences to be drawn from the primary facts.

PCB acted for the claimant bank in bringing claims to enforce Russian judgments for around US$40m in England. The defendant raised a defence that the Russian judgments were procured by fraud and/or that the English court should decline to enforce the judgments on the basis of public policy. In particular, he alleged that the judgment had been granted as part of a “corporate raid” in order to acquire his business and that as the claimant was a state-owned bank, it was impossible for him to get justice from the Russian court. PCB was able to persuade the English Court that the defence was without substance and summary judgment was granted in favour of the bank.

PCB acted for the claimant bank in relation to a substantial claim in deceit and breach of contract, which included worldwide freezing order relief in the sum of US$200m and ancillary freezing orders in the BVI and Cayman. In England, the case reached the Supreme Court on issues relating to piercing the corporate veil, choice of law and appropriate forum. In the English Court of Appeal there was additionally the issue of whether the claimant suffered loss caused by the alleged deceit given that it had entered into a participation agreement with another bank that passed on all of the risk. In the BVI, issues arose as to whether it was appropriate for the BVI Court to grant relief that overlapped with the English freezing order. In the Cayman Court of Appeal, the issue was whether the Cayman Court could grant freezing order relief in support of the English proceedings. PCB established that the Cayman Courts could indeed grant such relief.

PCB acted for the claimant, a company connected to a large bank to which claims of the bank against the guarantor of loans had been assigned. The claimant brought proceedings in Russia against the guarantor and at the same time, PCB obtained freezing orders in the BVI, Jersey and Cyprus, and interim receivership orders in Cyprus in order to preserve a complex structure through which substantial Russian real estate assets were held. PCB alleged that assets held by a Jersey foundation were in truth still owned by the guarantor, alternatively that the transfer of those assets to the foundation should be set aside as a transaction to defraud the claimant. At the same time, having obtained judgments in Russia for US$40m (and judgments in Jersey and BVI on the back of the Russian judgments), PCB successfully applied to the BVI Court for the appointment of an interim receiver over the guarantor’s beneficial interest in 2 BVI companies. Those BVI companies had the power to change the management of the Jersey foundation, so as to be able to take control of it for the purposes of winding it up or making a distribution to the guarantor, either of which would have led to successful enforcement. The case subsequently settled.

PCB acted for the primary defendant to a US$1bn claim. The claimants obtained permission to serve him out of the jurisdiction, a worldwide freezing order in the sum of £100m and other injunctive relief to stop him publishing allegations against claimants of serious wrongdoing, including the breach of various banking regulations. In obtaining such relief, the claimants had relied upon a very large volume of emails that had been hacked from the defendant’s email account and accounts of friends and family. The claimants however claimed not to have been involved in the hacking, saying that the material had been provided to them anonymously in the post. Following cross-examination of the claimants’ witnesses, the court concluded that they had given dishonest evidence about the hacked material and also breached undertakings regarding the preservation of related evidence. As a consequence the permission to serve PCB’s client out of the jurisdiction was set aside and the freezing order and other injunctive relief was discharged. An inquiry was ordered in respect of damage caused by the freezing order.

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