Springwell Navigation Corporation v JP Morgan Chase Bank and Others

Posted on 01/11/2010 · Posted in Financial Litigation

Nature of statements made by banks, exclusion of liability

The Claimant was Springwell Navigation Corporation, an investment vehicle, and the Defendant was JP Morgan Chase Bank.

The Claimant made substantial investments in emerging markets through the Defendant, including the Russian market during the second half of the 1990s. The Russian investments were in Russian bonds or instruments referenced to Russian bonds. While initially very profitable the Claimant’s notes later defaulted and a number of its other investments were also marked down.

The Claimant alleged that the Defendant had breached the duties it owed the Claimants in tort, contract and equity in failing to identify appropriate investments for it. The Claimant suggested that the disclaimer in the contractual documentation did not effectively exclude liability.

The Court held that in determining the outcome of such cases the context of statements made and the contract must be looked at. Where the bank’s representative gives his opinion, a recommendation or advice, the context might dictate that there was no obligation or duty regarding the giving of that advice. On the facts there was no duty, there was no advisory agreement and there was nothing to suggest either the Defendant or the Claimant believed reliance would take place.

Even where a duty did arise, banks would be able to rely on exclusion clauses, which were reasonable, given that parties could agree to what they liked when entering a contract. This was seen as a particularly strong argument where the investor was sophisticated. Exceptions being where the agreement was a sham or where it recorded a statement known to be false.

Link: Springwell Navigation Corporation v JP Morgan Chase Bank and Others [2010] EWCA Civ 1221

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