A preliminary analysis of cases issued in the Commercial Court in London in 2017 and 2018.
Many of the most significant financial markets cases are commenced in the Commercial Court in London, part of the Queen’s Bench Division of the High Court. Where cases are particularly high value, raise issues of general importance to the financial markets or where they would benefit from being heard by a specialist judge, they can be assigned to the Financial List. The Financial List takes cases from both the Commercial Court and the Chancery Division.
We have tracked Commercial Court cases involving banks as parties to actions that have been commenced in the calendar years 2017 and 2018. For these purposes we have included Financial List cases commenced in the Commercial Court.
Using Bloomberg data we have identified 71 such cases in 2018 compared to 104 in 2017. The most recently published official figures from the Ministry of Justice show that 642 cases in total (ie including the cases involving banks) were issued in the Commercial Court in 2018 to end Q3 2018 (which equates to an annual figure of 856 on a pro rata basis). The equivalent annual figure for 2017 was 805. On the basis of our figures, that means that for 2018, cases involving banks represented only about 8% of the total. For 2017, that figure was nearer to 13%. Even allowing for a reasonable margin of error, this represents a potentially significant fall in the number of cases involving banks over the last two years. The peak in the total number of cases in the Commercial Court was reached in the 2011 to 2013 period, and, with the possible blip of a small increase last year, the number of cases issued annually in that court has also declined year-on-year since then.
Some points of detail
- Bank-on-bank? We have only been able to identify one bank on bank claim in 2017, whereas there were 5 such claims in 2018. It is probably too much of a stretch to call this a trend but we will monitor the position.
- Claimant or defendant? The commonly held belief that banks are much more likely to be on the receiving end of claims seems to be unjustified, at least for the last two years. Ignoring bank on bank litigation, claims where a bank appeared as the defendant totalled 29 in 2018 and 49 in 2017, whilst claims where a bank appeared as the claimant totalled 37 in 2018 and 54 in 2017.
- How many Financial List claims? The number of claims involving banks assigned to the Financial List has remained fairly steady. Banks were involved in 9 such claims in 2018 and 10 in 2017, roughly half of the total number of Financial List claims in each year. Note: for the sake of completeness, these figures include one case from each year commenced in the Chancery Division.
- Subject matter (1): Of the cases for which we have managed to obtain statements of case (pleadings) so far - not all of the information is public - a total of 31 cases in 2018 and 51 in 2017, there were 11 cases in 2018 involving facility agreements and/or guarantees. That equates to approximately one third of the total. There were 17 cases involving facility agreements and/or guarantees in 2017, again approximately one third of the total.
- Subject matter (2): Other issues which formed the primary basis for disputes across both years include: breaches of other forms of contract (2018 - 5 cases; 2017 - 14 cases) ; derivatives (2018 - 2 cases; 2017 - 9 cases); fraud (2018 - 2 cases; 2017 - 3 cases); notes (2018 - 3 cases; 2017 - 0 cases) and mis-selling (2018 - 3 cases: 2017 - 0 cases). There were also 2 cases in 2018 and 3 cases in 2017 applying for the enforcement of foreign judgments.
- Locations of parties: Of cases from both years where we can determine the place of domicile of the non-bank parties, approximately 60% were based outside the UK. After the UK, the most common domiciles are Italy, The Cayman Islands, The Netherlands and the BVI (in that order). What is interesting is the international nature of the work undertaken by the court - entities from at least 26 nations are involved in these proceedings in London.
- What next? We will continue to track these cases and those commenced in 2019 and will gather statements of case as and when they become available. It is our intention to update our commentary on a regular basis and hope to able to identify trends as they form.
We will report again in due course.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.