Savings Bank of the Russian Federation v Refco Securities Llc [2006] EWHC 857 (Comm) (17 March 2006)

Savings Bank of the Russian Federation v Refco Securities Llc [2006] EWHC 857 (Comm) (17 March 2006)

Sberbank's letter of 2 December 2005 constituted a valid notice under paragraph 9.2(i) of the GMSLA, triggering the set-off mechanism as of that date. The correct date for valuation is the date of service of the notice under paragraph 9.2(i). An Event of Default under paragraph 14 of the GMSLA requires both the occurrence of a specified event and the service of written notice; obligations are accelerated as of the date of such notice, not retrospectively.

Citation
[2006] EWHC 857 (Comm)
Parties
Claimant: Savings Bank of the Russian Federation; Defendant: Refco Securities LLC
Jurisdiction
England and Wales
Judgment Date
17 March 2006
Procedural Posture
Commercial Claim (summary Judgment Application) / High Court (commercial Court) Summary Judgment
Outcome
Judgment for the Claimant (Sberbank)
Legal Topics
Securities Lending Agreements, Contract Interpretation, Default and Termination Provisions, Valuation of Collateral, Summary Judgment
Commercial Law Banking and Finance Securities Lending Agreements Contract Interpretation Default and Termination Provisions Valuation of Collateral Summary Judgment

Case Brief

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Parties

Savings Bank of the Russian Federation

Claimant

Refco Securities LLC

Defendant

Procedural Posture

Commercial Claim (summary Judgment Application) / High Court (commercial Court) Summary Judgment

Legal Issues

  1. 1 Whether Sberbank's letter of 2 December 2005 constituted a valid notice under paragraph 9.2(i) of the GMSLA
  2. 2 What is the correct date for valuation of collateral and calculation of set-off under the GMSLA
  3. 3 When does an Event of Default occur under paragraph 14 of the GMSLA

Ratio Decidendi

Sberbank's letter of 2 December 2005 constituted a valid notice under paragraph 9.2(i) of the GMSLA, triggering the set-off mechanism as of that date. The correct date for valuation is the date of service of the notice under paragraph 9.2(i). An Event of Default under paragraph 14 of the GMSLA requires both the occurrence of a specified event and the service of written notice; obligations are accelerated as of the date of such notice, not retrospectively.

Court Disposition

Judgment for the Claimant (Sberbank)

Orders

  • Defendant to pay Claimant US$120,114,706.03 by way of principal and US$1,565,465.65 by way of interest.
  • Claimant awarded costs of the action, to be definitively assessed.