UBS AG (London Branch) & Anor v Kommunale Wasserwerke Leipzig GMBH [2014] EWHC 3615 (Comm) (04 November 2014)

UBS AG (London Branch) & Anor v Kommunale Wasserwerke Leipzig GMBH [2014] EWHC 3615 (Comm) (04 November 2014)

The court held that KWL lacked capacity and its managing directors lacked authority to enter into the STCDO transactions without Supervisory Board approval under German law, rendering the transactions void. Alternatively, the transactions were voidable and have been avoided for bribery (Value Partners' bribe to KWL's director), conflict of interest, and fraudulent misrepresentation by UBS (through its agent Value Partners). UBS was held responsible for Value Partners' acts as its agent in the context of the bribe. Claims for damages for negligent portfolio management by UBS GAM were not established on the evidence. Claims by LBBW and Depfa for rescission of the Back Swaps for...

Citation
[2014] EWHC 3615 (Comm)
Parties
Claimant: UBS AG (London Branch); Claimant: UBS Global Asset Management (UK) Ltd; Claimant/third Party: UBS Limited; Defendant/third Party: Kommunale Wasserwerke Leipzig GmbH (KWL); Defendant/third Party: DEPFA Bank plc; Defendant/third Party: Landesbank Baden-Württemberg (LBBW)
Jurisdiction
England and Wales
Judgment Date
04 November 2014
Procedural Posture
Commercial Court Multi Party Claim (consolidated Actions) / Post Trial Judgment
Outcome
Claims by UBS and related parties dismissed; transactions declared void or rescinded; restitution ordered; counterclaims for damages dismissed.
Legal Topics
Credit Default Swaps, Collateralised Debt Obligations, Bribery, Conflict of Interest, Capacity and Authority, Fraudulent Misrepresentation, Rescission, Damages, Portfolio Management Negligence
Banking and Finance Commercial Law Contract Law Fraud and Misrepresentation Agency Law Credit Default Swaps Collateralised Debt Obligations Bribery +6 more

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Parties

UBS AG (London Branch)

Claimant

UBS Global Asset Management (UK) Ltd

Claimant

UBS Limited

Claimant/third Party

Kommunale Wasserwerke Leipzig GmbH (KWL)

Defendant/third Party

DEPFA Bank plc

Defendant/third Party

Landesbank Baden-Württemberg (LBBW)

Defendant/third Party

Procedural Posture

Commercial Court Multi Party Claim (consolidated Actions) / Post Trial Judgment

Legal Issues

  1. 1 Whether KWL had capacity and authority to enter into the STCDO transactions under German law
  2. 2 Whether the transactions are void or voidable for bribery, conflict of interest, or fraudulent misrepresentation
  3. 3 Whether Value Partners acted as agent for UBS, KWL, or both

Ratio Decidendi

The court held that KWL lacked capacity and its managing directors lacked authority to enter into the STCDO transactions without Supervisory Board approval under German law, rendering the transactions void. Alternatively, the transactions were voidable and have been avoided for bribery (Value Partners' bribe to KWL's director), conflict of interest, and fraudulent misrepresentation by UBS (through its agent Value Partners). UBS was held responsible for Value Partners' acts as its agent in the context of the bribe. Claims for damages for negligent portfolio management by UBS GAM were not established on the evidence. Claims by LBBW and Depfa for rescission of the Back Swaps for...

Court Disposition

Claims by UBS and related parties dismissed; transactions declared void or rescinded; restitution ordered; counterclaims for damages dismissed.

Orders

  • Balaba STCDO, Depfa Back Swaps, and LBBW Back Swap declared void or rescinded.
  • KWL not liable to UBS, LBBW, or Depfa under the STCDOs.