Kaupthing Singer & Friedlander Ltd v UBS AG [2014] EWHC 2450 (Comm) (18 July 2014)

Kaupthing Singer & Friedlander Ltd v UBS AG [2014] EWHC 2450 (Comm) (18 July 2014)

The court held that UBS's mistaken payment to Khf did not discharge its obligation to KSF under the FX trade. However, after the Master Agreement was terminated, KSF's claim lay only under the close-out provisions, not as a debt under the FX trade. The court found that UBS's close-out calculation was not a reasonable determination of 'Loss' because it omitted the $65 million. KSF was entitled to amend its claim and recover the $65 million as damages for UBS's failure to comply with its obligation to reasonably determine its Loss under the Master Agreement.

Citation
[2014] EWHC 2450 (Comm)
Parties
Claimant: Kaupthing Singer & Friedlander Limited (in administration); Defendant: UBS AG
Jurisdiction
England and Wales
Judgment Date
18 July 2014
Procedural Posture
Commercial Claim / High Court Judgment After Trial
Outcome
Claim allowed in part; KSF entitled to damages for $65 million plus interest.
Legal Topics
ISDA Master Agreement, Foreign Exchange Transactions, Close Out Netting, Reasonableness of Loss Calculation, Mistaken Payment, Administration of Insolvent Companies
Banking and Finance Contract Law Insolvency ISDA Master Agreement Foreign Exchange Transactions Close Out Netting Reasonableness of Loss Calculation Mistaken Payment +1 more

Case Brief

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Parties

Kaupthing Singer & Friedlander Limited (in administration)

Claimant

UBS AG

Defendant

Procedural Posture

Commercial Claim / High Court Judgment After Trial

Legal Issues

  1. 1 Whether UBS discharged its payment obligation under the FX trade by mistaken payment to KSF's parent company
  2. 2 Whether UBS's close-out calculation under the ISDA Master Agreement was a reasonable determination of 'Loss'
  3. 3 Whether KSF is entitled to a further payment of $65 million or damages for failure to include the sum in the close-out calculation

Ratio Decidendi

The court held that UBS's mistaken payment to Khf did not discharge its obligation to KSF under the FX trade. However, after the Master Agreement was terminated, KSF's claim lay only under the close-out provisions, not as a debt under the FX trade. The court found that UBS's close-out calculation was not a reasonable determination of 'Loss' because it omitted the $65 million. KSF was entitled to amend its claim and recover the $65 million as damages for UBS's failure to comply with its obligation to reasonably determine its Loss under the Master Agreement.

Court Disposition

Claim allowed in part; KSF entitled to damages for $65 million plus interest.

Orders

  • Permission to amend particulars of claim granted.
  • UBS to pay KSF $65,000,000 as damages for failure to reasonably determine Loss under the Master Agreement.