Our client is, naturally, very disappointed with the outcome of the Appeal having, effectively, lost on the facts as found by the judge at first instance while having succeeded on two points of law – one of which is particularly significant – in this test case.
The Court of Appeal has held that there was an implied representation by RBS that it was not manipulating, and did not intend to manipulate, sterling LIBOR when it sold PAG four sterling LIBOR swaps. In the absence of a factual finding that RBS manipulated sterling LIBOR, PAG's case failed, but the way appears to have been paved for misrepresentation claims to be brought by a party to a LIBOR-linked derivative or debt instrument, entered with a LIBOR panel bank which engaged in the manipulation or attempted manipulation of LIBOR. This will be particularly so where there have already been regulatory or other findings against that bank of manipulation in the LIBOR currency of the relevant contract.
The Court of Appeal also held that RBS (in this case through its Global Restructuring Group ("GRG")) could not exercise its contractual right to call for valuations of PAG's assets for a purpose unrelated to the bank's legitimate commercial interests. No doubt this will be welcome news to customers and former customers of GRG who consider that valuations were undertaken oppressively.
PAG had argued for wider representations as a matter of law and we are considering with PAG the prospect of appealing that aspect to the Supreme Court.