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The appeal court confirmed an earlier decision that allegations of fraudulent misrepresentation can stand against Barclays which relate to its manipulation of LIBOR. The claim was brought against Barclays by The Guardian Care group of companies who say they were mis-sold interest rate swap products by Barclays.
Delivering the judgment Longmore LJ stated at para 27:
“…the banks did propose the use of LIBOR and it must be arguable that, at the very least, they were representing that their own participation in the setting of the rate was an honest one. It is, to my mind, surprising that the banks do not appear to be prepared to accept that even that limited proposition is arguable”
He went on to say at paragraph 30:
“The banks submission boiled down to saying that they were prepared to accept that they would do nothing dishonest or manipulative during the term of the contract and that should be enough for the counterparty. I can only say that, in my view, it is arguably not enough. If the day after the contracts had been made, the banks told their counterparties that they had been manipulating LIBOR in the past and intended to do so in the future, but would be happy to pay any loss that their borrowers could prove, the borrower would (arguably) be sufficiently horrified so as to think he would be entitled to rescind the deal. The law should strive to uphold the reasonable expectations of honest men and women”.
This is certainly helpful for anybody pursuing a SWAPS claim again the banks and it is good to see the bank being brought to order by the courts on this.