Derivatives & Structured Products Litigation

Clients seek the expertise of the firm’s litigators in resolving derivatives and structured products disputes across many product areas, from options, futures, commodity derivatives and interest rate swaps to securitisations, synthetic collateralised debt obligations and structured investment vehicles.

The litigation team works closely with the firm’s market-leading derivatives and structured products practices. Together, they guide clients through the most complex disputes, including those involving credit-linked notes, fund-linked notes, portfolio credit default swaps, synthetic notes, repurchase and stock-lending agreements and self-referenced instruments.

Linklaters’ litigators have experience of dealing with global regulators and insolvency practitioners. The firm advises on excessive mark-ups, unsuitability and mismanagement claims, contract settlements following issuer defaults and jurisdictional disputes over derivative products.

Recent derivatives disputes cases includes advising:
  • a major international bank in its successful claim against a Sri Lankan state owned oil company to recover over US$160m under certain oil hedging contracts. The Sri Lankan company unsuccessfully defended the case claiming the transactions were void through a lack of capacity and authority; that the bank was liable in misselling – breach of duty and misrepresentation – and that payment would be illegal under Sri Lankan law. Judgment was given by the UK Commercial Court in June 2011. The Sri Lankan company has been given permission to appeal to the Court of Appeal on the lack of capacity defence
  • an international investment bank in its ongoing claim against a German local authority for non-payment under a CDO. The local authority is claiming lack of capacity as well as that the CDO was “missold” to it. Following the commencement of proceedings by the bank in the UK, the local authority started its own proceedings in Germany and challenged the jurisdiction of the English courts on grounds that, because the claim related to its capacity to enter the CDO, it had to be heard by its home state (as a result of Article 22(2) Brussels Regulation). This argument was rejected by the English first instance court and Court of Appeal and by the Berlin court. It was ultimately referred to the European Court of Justice, which ruled in May 2011 that this was not a case to which Article 22(2) applied, meaning that the case should proceed in the UK
  • a major investment bank in connection with its successful defence of a €100m claim brought by a San Marino bank in the English commercial court regarding the sale and structuring of a number of credit-linked notes, including CDO-squared transactions. The claim involved allegations of misselling, including fraud
  • a number of financial institutions in relation to SFC regulatory investigations (and LegCo hearings) relating to the sale of Lehman minibonds
  • a major bank on a banking dispute with regard to the liability of the bank which was invoked for alleged misselling of investment products
  • a French bank in a Cayman action over a hedge fund-linked principal protected product