The great and the good of the bar are preparing to go head-to-head in a courtroom showdown resulting from the nationalisation of Northern Rock.
Former shareholders in the bank, which was nationalised in March, have applied to launch a judicial review, claiming that the Government’s valuation assumptions for shareholder compensation do not reflect reality.
The Government refutes the shareholders’ claim that it expropriated their shares and told them so via a letter from Slaughter and May partner Elizabeth Barrett. However, with the shareholders turning to the likes of David Pannick QC, George Bompas QC and Michael Beloff QC, Whitehall is taking no chances and has drafted in heavyweight silk Lord Anthony Grabiner QC.
Although Grabiner will be up against seven other barristers, Linklaters litigation partner Tom Lidstrom believes the match is fair.
“I think there’s some good firepower on both sides,” he says. “Tony Grabiner is extremely tenacious and extremely adaptable. That means, as always happens in a case that’s this complex, as points rise and fall in prominence he adapts quickly to that situation with the judge.”
Grabiner is no stranger to the Government, having advised it in the run-up to legislation that saw Railtrack placed into administration before being bought by Government-backed Network Rail, a nationalisation of sorts.
Interestingly, Grabiner had advised the Government against nationalising Railtrack because he felt it would have to make huge compensation payments to shareholders, as was disclosed during the litigation Edwin Coe partner David Greene brought on behalf of Railtrack’s investors. Brick Court’s Jonathan Sumption QC represented the Government in that courtroom showdown.
In the Northern Rock case, which is expected to go to trial within 12 months if permission for the review is granted, Grabiner will face a fearsome team of opponents, with hedge fund SRM Global (which is represented by White & Case partner John Reynolds) instructing Blackstone Chambers’ Pannick and Claire Weir, as well as Matthew Collings QC of Maitland Chambers.
The small shareholders, who have instructed Edwin Coe’s Greene, have drafted in 4 Stone Buildings’ Bompas, while Nabarro partner Peter Fitzpatrick, who is representing RAB Capital, has instructed Beloff and his Blackstone Chambers colleague Iain Steele, as well as David Wolfson of One Essex Court.
Pannick is also no stranger to government-related work (or rather anti-government-related work), having been part of the Blackstone team that launched a major legal action against the Serious Fraud Office, the Attorney-General and former Prime Minister Tony Blair over the decision to drop an investigation into BAE Systems’ involvement in a Saudi Arabia defence contract.
Grabiner should be quaking in his boots given that the High Court ruled in April that the decision was unlawful.
As Lidstrom says: “Pannick is excellent – first-rate – and extremely smart.”
Which is precisely why Reynolds instructed him. He says: “It was a no-brainer. He just knows the subject better than anyone else. He’s calm, measured, not over-the-top and he doesn’t take bad points. He has the respect of judges.”
The crux of the investors’ argument is that the Government assumed Northern Rock was insolvent when it was put into administration, meaning any compensation will be calculated on that basis. The shareholders believe the bank was, in fact, a going concern and SRM will use insolvency expert Collings to argue the point. Reynolds says of Collings: “He’s a very creative, hands-on chancery lawyer with particular expertise in company law and insolvency.”
With Beloff and Bompas also working for the shareholders, Grabiner has his work cut out for him.
As Reynolds says: “We [all shareholders] have really cornered the market.”
That said, he adds: “I think Grabiner is fantastic. He’s a sensible commercial barrister and will approach things in a businesslike manner.
“He’s a good guy to have on the other side because he’s sensible, practical and creative.”
And with such a top-flight roster of barristers working on the judicial review, the costs sheet for the case will make very interesting reading.