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Commercial Court passes on Claimants’ invitation to strike out pass-on defences in FX Litigation


The Commercial Court today substantially dismissed an application by the Claimants in Allianz Global Investors GmbH and ors v Barclays Bank plc and ors to strike out the Defendants’ pass-on and tax reduction defences. The application involved novel questions concerning the standing of beneficiaries to sue and the application of the reflective loss rule to former shareholders.


Over 170 Claimants make follow-on and stand-alone claims for damages for alleged anti-competitive conduct between 2003 and 2013 involving traders from the Defendant banks who are alleged to have affected FX markets. The Claimants are predominantly investment funds.       

All of the Defendants pleaded brief pass-on defences. The Claimants applied to strike these out in January 2020. The parties agreed to stay the application and the Defendants’ requests for pass-on disclosure until the Supreme Court’s judgment in Sainsbury’s Supermarkets Ltd v Visa Europe Services LLC [2020] UKSC 24 (which partly concerned the pass-on defence): see here. Thereafter the Defendants provided proposed further particulars of their pass-on defences and the Claimants confirmed they pursued their strike-out application. The Defendants applied to amend their defences to incorporate the further particulars. The applications were heard by Sir Nigel Teare over three days between 15 and 17 February 2021.

The principal allegations in issue concerned alleged pass-on by way of redemptions or withdrawals of investments from the Claimant funds. The Defendants said that pass-on occurred where, assuming a Claimant fund suffered loss from a less favourable FX transaction reducing its net asset value, an investor subsequently redeems its investment in the fund at a loss: see Judgment [9-12].      

The Claimants contended that certain pass-on defences had no real prospect of success, essentially because, where an investor redeems their investment, the only legal entity with title to sue is the fund itself. There could be no pass-on, because pass-on requires that the party to whom loss has been passed on must have their own cause of action for that loss.

The Claimants relied upon four main arguments (all based upon English law):

  1. For Claimant funds which are trusts, only the trustee has title to sue (the “Trust Issue”).
  2. For Claimant funds which are companies, the reflective loss rule precludes any claim by former investor–shareholders (the “Reflective Loss Issue”).
  3. For Claimant funds which are limited partnerships, only the general partner may sue, and former limited partner–investors have no right to sue (the “Partnership Issue”).
  4. In the case of all redemptions, the contractual arrangements between the Claimant funds and their investors precluded any claims by former investors against third parties (the “Contracts Issue”).


After some hesitation, the Sir Nigel Teare considered that it was appropriate to determine the first three issues: Judgment [40-50]. The Contracts Issue, however, could only be determined at trial in light of a fuller understanding of the provisions relied upon: Judgment [51-56].

Trusts Issue

On the Trusts Issue, Sir Nigel Teare accepted the Defendants’ submissions that all individuals – beneficiaries included – have the right to claim damages for a breach of Article 101 TFEU (applying the principles established in Courage v Crehan [2002] QB 507): Judgment [58-63]. Beneficiaries also had a corresponding right in domestic law under s.2 of the Competition Act 1998: Judgment [74-75]. As a matter of English trusts law, the Judge also accepted the Defendants’ submissions that where a beneficiary is owed a duty and has suffered loss they have and may assert their own cause of action: Judgment [57]. Because beneficiaries were owed the statutory competition law duties, it was therefore irrelevant that any beneficiary bringing a claim now might not be able to rely upon the EU general principle of effectiveness as a result of Brexit: Judgment [73].

As to loss, the Judge accepted that, when an investor–beneficiary redeems their investment from a fund which has suffered loss, the former suffers a loss which has crystallised: Judgment [74-79]. The Defendants’ allegations of pass-on in respect of the trust Claimant funds therefore had a real prospect of success: Judgment [80].

Reflective Loss Issue

This issue fell to be decided in light of the Supreme Court’s recent restatement of the reflective loss principle, also known as ‘the rule in Prudential’, in Sevilleja v. Marex Financial Ltd [2020] UKSC 31.

The Judge’s starting point was again that all persons suffering loss had the benefit of the statutory duties under Article 101 TFEU and s.2 1998 Act: Judgment [82]. While it was arguable that the loss suffered by an investor–shareholder on redemption is a reflection of the loss suffered by the company (Judgment [89-90]), there was no justification for the application of the reflective loss rule to shareholders who have redeemed, having regard to Lord Reed’s analysis of the rule in Marex: Judgment [99-101]. The allegations of pass-on in respect of corporate funds therefore also had a real prospect of success: Judgment [102].

Partnership Issue

The Judge held that limited partners suffering loss had the benefit of the statutory duties. Because a limited partner having withdrawn its investment from a partnership would have crystallised its loss, it would not be disabled from bringing its own claim. The case in relation to partnerships also was therefore required proceed to trial: Judgment [103-104].

Other matters

The Court ordered that allegations concerning pass-on between Claimants and their downstream clients or customers should be struck out (Judgment [113]).

In relation to tax, where the Defendants had made a general plea that the Claimants had to give credit for any tax reduction, the Court held that the Defendants should provide further information concerning their case on tax and the Claimants should provide information in relation to aspects of their tax positions: Judgment [108].      

The Judgment is here.

Marie Demetriou QC, Colin West QC and Richard Howell, instructed by Quinn Emmanuel Urquhart & Sullivan UK LLP, represented the Claimants.

Mark Hoskins QC and David Heaton, instructed by Latham & Watkins (London) LLP, represented the First Defendant, Barclays Bank Plc. Mark was jointly instructed to represent all of the Defendants at the hearing. Daniel Piccinin is also instructed by Barclays in the main proceedings.

Sarah Abram and Tom Wood, instructed by Norton Rose Fulbright LLP, represented the Fourth Defendant, HSBC, and Sarah also made submissions on behalf of all of the Defendants at the hearing. Helen Davies QC is also instructed by HSBC in the main proceedings.

Sarah Love, instructed by Macfarlanes LLP, represented the Seventh Defendant, NatWest Markets Plc. Tom Pascoe is also instructed by NatWest in the main proceedings.

Sarah Ford QC is instructed by the Fifth and Sixth Defendants, JP Morgan, in the main proceedings.

Tony Singla is instructed by the Second and Third Defendants, Citibank and Citigroup, in the main proceedings.