Marex Financial Ltd v Fluxo-Cane Overseas Ltd & Anor

Marex Financial Ltd v Fluxo-Cane Overseas Ltd & Anor

FCO's refusal to pay margin on demand and to give liquidation orders constituted a repudiation of its contractual obligations, amounting to an Event of Default under the Terms of Business. Marex was contractually entitled to liquidate FCO's positions without prior notice. The liquidation was conducted reasonably and not with gross negligence. FCA is liable under the guarantee for the principal debt and contractual interest.

Parties
Claimant: Marex Financial Limited; First Defendant: Fluxo-Cane Overseas Limited; Second Defendant: S/A Fluxo Comercio e Assessoria Internacional
Jurisdiction
England and Wales
Judgment Date
27 October 2010
Procedural Posture
Commercial Debt Recovery / Final Judgment After Trial
Outcome
Judgment for the claimant against the second defendant (FCA); counterclaim dismissed
Legal Topics
Breach of Contract, Guarantee Enforcement, Margin Call Obligations, Liquidation of Positions, Broker Duties, Default Events
Contract Law Banking and Finance Commercial Law Breach of Contract Guarantee Enforcement Margin Call Obligations Liquidation of Positions Broker Duties +1 more

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Parties

Marex Financial Limited

Claimant

Fluxo-Cane Overseas Limited

First Defendant

S/A Fluxo Comercio e Assessoria Internacional

Second Defendant

Procedural Posture

Commercial Debt Recovery / Final Judgment After Trial

Legal Issues

  1. 1 Whether Marex was contractually entitled to liquidate FCO's positions on 17-18 January 2008
  2. 2 Whether FCO was in default of its margin obligations under the agreement
  3. 3 Whether Marex's conduct of the liquidation was grossly negligent or in breach of duty

Ratio Decidendi

FCO's refusal to pay margin on demand and to give liquidation orders constituted a repudiation of its contractual obligations, amounting to an Event of Default under the Terms of Business. Marex was contractually entitled to liquidate FCO's positions without prior notice. The liquidation was conducted reasonably and not with gross negligence. FCA is liable under the guarantee for the principal debt and contractual interest.

Court Disposition

Judgment for the claimant against the second defendant (FCA); counterclaim dismissed

Orders

  • FCA to pay Marex US$4,246,094.97 plus contractual interest at 4% over 3 month LIBOR from 23 January 2008
  • Counterclaim by FCO/FCA dismissed