In proceedings in the Commercial Court, Deutsche Bank sued two foreign Defendants for mistake and breach of constructive trust. The context for the claim was the provision by the Bank of prime brokerage services to Sebastian Holdings Inc to facilitate FX and equities derivatives trading. The Bank claimed that huge losses of over $750 million had been sustained by Sebastian Holdings through such trading and the Bank was left with a $250 million deficit once it had realised the security it held to abide the trades. The dispute between Deutsche Bank and Sebastian Holdings is the subject of concurrent proceedings in New York and England.
In the present claim, the Bank alleged that, in the midst of the turmoil in the financial markets in October 2008, the Bank's internal system ("the DBX system") had in error failed accurately to record the extent to which there was "Available Cash" in Sebastian Holdings' London account with the Bank. As a result, so the Bank alleged, it had authorised certain payments out at the behest of Sebastian Holdings to the two Defendants. The Bank claimed to be entitled to the return of such moneys by way of a restitutionary claim based upon a mistake and/or a proprietary claim based upon constructive trust.
The Defendants were based in Monaco and Chile, respectively. The Bank had, therefore, obtained permission without notice to serve out of the jurisdiction.
The Defendants then challenged the jurisdiction of the English Court. Following a 2 day hearing, Burton J acceded to the Defendants' application to set aside the permission to serve out and to dismiss the claims. He found that Deutsche Bank had not demonstrated that there was any serious issue to be tried, either as to mistake or constructive trust.
The judgment is here.
Tim Lord QC and Jasbir Dhillon represented the Defendants (and also represent Sebastian Holdings in the related Commercial Court litigation).