Haugesund Kommune & Anor v Depfa ACS Bank & Anor [2010] EWCA Civ 579 (27 May 2010)

Haugesund Kommune & Anor v Depfa ACS Bank & Anor [2010] EWCA Civ 579 (27 May 2010)

The Kommunes lacked capacity under Norwegian law to enter into the swaps contracts, and this lack of capacity rendered the contracts void under English law. Depfa was entitled to restitution of the sums advanced, as the public policy bar in Sinclair v Brougham did not prevent recovery at law in these circumstances....

Source-derived case information.

Citation
[2010] EWCA Civ 579
Parties
Claimant/appellant: Haugesund Kommune; Claimant/appellant: Narvik Kommune; Defendant/respondent: Depfa ACS Bank; Part 20 Defendant/appellant: Wikborg Rein & Co
Jurisdiction
England and Wales
Judgment Date
27 May 2010
Procedural Posture
Appeal (from Commercial Court, Queen's Bench Division) / Court of Appeal Judgment
Outcome
Appeal dismissed; cross-appeal dismissed; judgment for Depfa against Kommunes and Wikborg Rein & Co as per first instance.
Legal Topics
Capacity of Corporations, Ultra Vires Contracts, Restitution for Void Contracts, Change of Position Defence, Authority of Agents, Applicable Law Clauses
Conflict of Laws Restitution Banking and Finance Capacity of Corporations Ultra Vires Contracts Restitution for Void Contracts Change of Position Defence Authority of Agents +1 more

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Parties

Haugesund Kommune

Claimant/appellant

Narvik Kommune

Claimant/appellant

Depfa ACS Bank

Defendant/respondent

Wikborg Rein & Co

Part 20 Defendant/appellant

Procedural Posture

Appeal (from Commercial Court, Queen's Bench Division) / Court of Appeal Judgment

Legal Issues

  1. 1 Whether Norwegian municipalities (Kommunes) had capacity to enter into 'zero coupon swaps' contracts under Norwegian law and English conflict of laws rules
  2. 2 Whether the contracts were void for lack of capacity or authority
  3. 3 Whether Depfa could recover sums advanced in restitution after contracts held void

Ratio Decidendi

The Kommunes lacked capacity under Norwegian law to enter into the swaps contracts, and this lack of capacity rendered the contracts void under English law. Depfa was entitled to restitution of the sums advanced, as the public policy bar in Sinclair v Brougham did not prevent recovery at law in these circumstances. The Kommunes could not rely on a change of position defence, as their investment losses did not meet the requirements for such a defence. Wikborg Rein & Co was liable in negligence for advice given to Depfa.

Court Disposition

Appeal dismissed; cross-appeal dismissed; judgment for Depfa against Kommunes and Wikborg Rein & Co as per first instance.

Orders

  • Declaration that swaps contracts are void
  • Kommunes to repay sums advanced by Depfa plus interest