Michael Holmes successfully challenges the jurisdiction of the Commercial Court in claims made by the Libyan Investment Authority

Michael Holmes

The Libyan Investment Authority v JP Morgan Markets Limited [2019] EWHC 1452 (Comm)

Bryan J has today handed down judgment on certain applications made in The Libyan Investment Authority v JP Morgan Markets Limited [2019] EWHC 1452 (Comm).  The case involves claims by the Libyan Investment Authority (“the LIA”), a sovereign wealth fund, to rescind a US$200 million transaction entered into with Bear Stearns International Limited in November 2007 on the grounds that Bear Stearns’ agent, a Libyan national named Mr Giahmi, had paid bribes and made threats to officers of the LIA to gain influence with the LIA and had used that influence to procure the Bear Stearns transaction.  Bear Stearns was acquired by JP Morgan Markets Limited in 2008.

The LIA also made claims against Mr Giahmi and the Cayman company through which he offered his services, Lands Company Ltd (“Lands”), for monies had and received, dishonest assistance, knowing receipt and damages.  The sums claimed by the LIA were the commissions earned by Lands on completion of the transaction.

The LIA obtained permission to serve Mr Giahmi and Lands out of the jurisdiction from Teare J ex parte on documents in the usual way.  Mr Giahmi and Lands applied to set aside the order on the basis that the LIA’s claims had no real prospect of success as a matter of English law because they were time-barred and on the basis that the LIA failed to give full and frank disclosure of material facts to Teare J. 

Following a three-day hearing in May, in which Michael Holmes appeared as sole counsel for Lands, Bryan J held that the order of Teare J should be set aside.  The LIA’s claims against Mr Giahmi and Lands did not have a real prospect of success.  Had the LIA used reasonable diligence it would have discovered the facts alleged to constitute the fraudulent scheme on which the LIA relied more than six years before the claim form was issued; as a consequence the claims were time-bared.   Further, in failing to mention to Teare J the defendants’ substantial limitation defences, and the need for the LIA to rely upon section 32 of the Limitation Act the LIA   were guilty of a breach of the duty of full and frank disclosure which was both conscious, and therefore deliberate, and was, substantial; it was “an egregious, breach of duty in relation to a matter, limitation, which, on any view, went to the heart of the merits of the application for permission to serve out.” That breach in and of itself justified setting aside the order of Teare J.  The Judge also found that the LIA’s claim to recover Lands’ commission as damages or moneys had and received as opposed to the much smaller amounts of the alleged bribes had no real prospect of success.

The judgment brings to an end the LIA’s claims against Mr Giahmi and Lands and removes those defendants from the proceedings, which will continue against JP Morgan alone.

Michael was instructed by  Stewarts Law LLP.

A copy of the judgment can be found here.

Date added: June 10th, 2019