When Lovells partners met in Brussels for their conference this weekend, let’s hope there was a big round of applause for Chris Grierson. For at the end of last week, Grierson’s team managed to pull off a massive House of Lords victory for Deloitte & Touche in the ongoing battle for compensation from the Bank of England for the BCCI collapse. The liquidators will now be able to sue the bank for up to £1bn.
Lovells could be forgiven for a touch of battle fatigue at this point. It has been advising Deloittes’ Chris Morris on this case since BCCI collapsed in 1991. Morris is famously partial to argy-bargy, most notably on Laker Airways and then on Polly Peck. The fact that he and Grierson managed to get Three Rivers v Bank of England this far – and with split decisions all the way – shows a tenacity verging on the brinkmanship. Not only brinkmanship, but creativity; because the Bank of England enjoys statutory immunity from negligence actions, the liquidators’ team had to resort to a spot of legal archaeology to come up with misfeasance – hardly a tort with a whole lot of substance.
Over at Freshfields Bruckhaus Deringer, advisers to the Bank of England, the mood was stunned. Its written case ran to no fewer than 737 pages, but it still failed to strike out the claims. Quite apart from anything else, the House of Lords kicked away the crutch of the 1992 Bingham report into BCCI, which lacked statutory powers and was conducted behind closed doors.
To add insult to injury, the solicitors will probably make less money than the barristers. Freshfields’ approach was counsel-heavy; Mark Phillips QC of 3-4 South Square and Nicholas Stadlen QC and Bankim Thanki of Fountain Court do not come cheap. Freshfields, on the other hand, had some fee pressure applied from the bank (something that Bank of England legal head Len Berkowitz might want to do something about when he turns gamekeeper at Freshfields later this year). The case hardly figures in the litigation department’s top 10 billings, let alone firmwide, and it barely passes the £1m mark.
So will Three Rivers v Bank of England lead to copycat actions against the bank? The general consensus is that it will not, although Hall v Bank of England in 1999 took inspiration from it. Misfeasance is exceptionally difficult to characterise, let alone prove, so Deloittes and Lovells had better keep all the BCCI creditors onside. But even though this victory will not necessarily open the floodgates, it could certainly bring a new dimension to the liquidation process. And will Freshfields advise the Bank of England to settle? Don’t even think about it.