Standard Chartered PLC v Guaranty Nominees Ltd & Ors

Standard Chartered PLC v Guaranty Nominees Ltd & Ors

It is an implied term of the Preference Shares that if the express definition of Three Month LIBOR ceases to be capable of operation, dividends should be calculated using the reasonable alternative rate to three month USD LIBOR at the date the dividend falls to be calculated. The Proposed Rate (CME Term SOFR plus ISDA Spread Adjustment) is currently the reasonable alternative rate. The Funds' argument for mandatory redemption is rejected as inconsistent with the contract's purpose, express terms, and regulatory requirements.

Parties
Claimant: Standard Chartered PLC; First Defendant: Guaranty Nominees Limited; Second Defendant: D E Shaw Galvanic Portfolios LLC; Third Defendant: Olifant Fund Ltd.; Fourth Defendant: FFI Fund Ltd.; Fifth Defendant: FYI Ltd.
Jurisdiction
England and Wales
Judgment Date
15 October 2024
Procedural Posture
Commercial/financial List Test Case / Judgment After Trial
Outcome
Claim allowed in part; declarations granted as to implied term and reasonable alternative rate; Funds' counterclaim for redemption dismissed.
Legal Topics
Implied Terms, Interpretation of Financial Instruments, LIBOR Transition, Preference Shares, Fallback Provisions
Banking and Finance Law Contract Law Company Law Implied Terms Interpretation of Financial Instruments LIBOR Transition Preference Shares Fallback Provisions

Case Brief

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Parties

Standard Chartered PLC

Claimant

Guaranty Nominees Limited

First Defendant

D E Shaw Galvanic Portfolios LLC

Second Defendant

Olifant Fund Ltd.

Third Defendant

FFI Fund Ltd.

Fourth Defendant

FYI Ltd.

Fifth Defendant

Procedural Posture

Commercial/financial List Test Case / Judgment After Trial

Legal Issues

  1. 1 How should dividends on perpetual preference shares referencing LIBOR be calculated after the cessation of LIBOR publication?
  2. 2 Is there an implied term permitting use of a reasonable alternative rate?
  3. 3 Should the shares be redeemed if LIBOR is unavailable?

Ratio Decidendi

It is an implied term of the Preference Shares that if the express definition of Three Month LIBOR ceases to be capable of operation, dividends should be calculated using the reasonable alternative rate to three month USD LIBOR at the date the dividend falls to be calculated. The Proposed Rate (CME Term SOFR plus ISDA Spread Adjustment) is currently the reasonable alternative rate. The Funds' argument for mandatory redemption is rejected as inconsistent with the contract's purpose, express terms, and regulatory requirements.

Court Disposition

Claim allowed in part; declarations granted as to implied term and reasonable alternative rate; Funds' counterclaim for redemption dismissed.

Orders

  • Declaration that dividends on the Preference Shares are to be calculated using the reasonable alternative rate to three month USD LIBOR, currently CME Term SOFR plus ISDA Spread Adjustment, after the cessation of LIBOR publication.
  • Funds' claim for implied term requiring redemption of the Preference Shares dismissed.