Savings Bank of the Russian Federation v Refco Securities Llc

Savings Bank of the Russian Federation v Refco Securities Llc

Sberbank's letter of 2 December 2005 constituted a valid notice under paragraph 9.2(i) of the GMSLA, entitling it to set-off the market value of the collateral against the loans as of that date. The correct valuation date is the date of service of the notice under paragraph 9.2(i). An Event of Default under the GMSLA requires both the occurrence of a specified event and the service of written notice, and the valuation date for set-off following an Event of Default is the first business day after the notice is served.

Parties
Claimant: Savings Bank of the Russian Federation (Sberbank); Defendant: Refco Securities LLC (RSL)
Jurisdiction
England and Wales
Judgment Date
17 March 2006
Procedural Posture
Commercial Contractual Dispute (summary Judgment Application) / Judgment on Application for Summary Judgment
Outcome
Judgment for the Claimant (Sberbank)
Legal Topics
Securities Lending Agreement, Contract Interpretation, Events of Default, Set Off and Valuation Dates
Commercial Law Banking and Finance Law Securities Lending Agreement Contract Interpretation Events of Default Set Off and Valuation Dates

Case Brief

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Parties

Savings Bank of the Russian Federation (Sberbank)

Claimant

Refco Securities LLC (RSL)

Defendant

Procedural Posture

Commercial Contractual Dispute (summary Judgment Application) / Judgment on Application for Summary Judgment

Legal Issues

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

Ratio Decidendi

Sberbank's letter of 2 December 2005 constituted a valid notice under paragraph 9.2(i) of the GMSLA, entitling it to set-off the market value of the collateral against the loans as of that date. The correct valuation date is the date of service of the notice under paragraph 9.2(i). An Event of Default under the GMSLA requires both the occurrence of a specified event and the service of written notice, and the valuation date for set-off following an Event of Default is the first business day after the notice is served.

Court Disposition

Judgment for the Claimant (Sberbank)

Orders

  • RSL to pay Sberbank US$120,114,706.03 by way of principal and US$1,565,465.65 by way of interest.
  • RSL to pay the costs of the action, including the application, to be definitively assessed.