United States: All Claims Dismissed In The First Major Judgment Involving The Alleged Manipulation Of LIBOR

In the wake of the LIBOR scandal, many of the banks which were subject to regulatory actions have faced claims of mis-selling of financial instruments referenced to LIBOR. In Graiseley Properties Ltd v Barclays Bank plc1 the Court of Appeal held that, in principle, a claim based on an implied misrepresentation that a bank was not attempt- ing to manipulate LIBOR was arguable. The recent judgment in Property Alliance Group ("PAG") v Royal Bank of Scotland plc ("RBS")2 is the first time that the formu- lation of those implied representations has been put to the test in a full trial.

In a judgment handed down on 21 December 2016, Asplin J dismissed all of PAG's claims against RBS, including claims based on alleged LIBOR-related misrepresenta- tions and implied terms which were almost identical to those in Graiseley. However, of particular note, given the number of pending LIBOR-related mis-selling claims, are Asplin J's detailed obiter (non-binding) comments about the way in which the repre- sentations and implied terms could have been re-formulated and how hypothetical al- ternative facts might have affected the success of PAG's claims.


PAG brought proceedings against RBS in the English High Court claiming that it had been mis-sold four interest rate swaps by RBS between 2004 and 2008 (the "Swaps"). Each of those Swaps was referenced to the 3 month Pound Sterling ("GBP") LIBOR rate.

Whilst PAG's claims fell into three categories (all of which were ultimately dismissed), this note focusses solely on the LIBOR-related claims (the "LIBOR Claims").3 In thisrespect, PAG claimed (i) rescission (i.e. unwinding the transaction) on the ground that RBS had made a number of misrepresentations about LIBOR and the way in which it was set (the "LIBOR Misrepresentation Claims"); and (ii) damages on the ground that RBS had breached a number of implied terms in each of the Swaps (the "LIBOR Implied Terms Claims").


PAG argued that there were five representations4 which could be inferred by a reason- able representee in PAG's position5 from RBS' words and conduct in proposing and entering into each of the Swaps.6

Despite a standard implied term that the parties to each of the Swaps would conduct themselves honestly when performing the contract, Asplin J came to the conclusion that, in the relevant factual context of the case, "the mere proferring of the draft Swaps referable to the 3 month GBP LIBOR rate was [not] in itself sufficient conduct from which the LIBOR Representations could be inferred by the reasonable represen- tee".7 This dismissed the LIBOR Misrepresentation Claims entirely.

However, helpfully, Asplin J went on to consider, obiter, the position if there had been sufficient conduct to found the implied representations: would a reasonable represen- tee in PAG's position have drawn the inferences contained in the LIBOR Representations?

LIBOR Representation 1: "On any given date up to and including the date of each of the Swaps, LIBOR represented the interest rate as defined by the BBA, being the average rate at which an individual contributor panel bank could borrow funds by asking for and accepting interbank offers in reasonable market size just prior to 11am on that date". Asplin J concluded that this formulation was too widely drawn and technical to have been inferred by a reasonable representee. However, had there been suffi- cient conduct, Asplin J held that she "would have found...that a reasonable represen- tee would have inferred from the use of LIBOR as a benchmark that LIBOR in rela- tion to the tenor and currency to which the transaction related was set at the date of the transaction and would be set throughout its term in accordance with the relevant definition, being the BBA definition8"

LIBOR Representation 2: "RBS had no reason to believe that on any given date LIBOR has represented anything other than the interest rate defined by the BBA, be- ing the average rate at which an individual contributory panel bank could borrow funds by asking for and accepting interbank offers in reasonable market size just pri- or to 11am on that date". Again, Asplin J found that PAG's formulation was too broad in that it encompassed all dates in the past and all tenors and currencies to which LI- BOR is applied. However, had there been sufficient conduct, Asplin J held that she "would have found that a reasonable representee would have inferred that RBS had no reason to believe that LIBOR in relation to the tenor and currency to which each Swap related would be other than the interest rate as defined by the BBA during the life of each Swap".9

LIBOR Representation 3: "RBS had not made false or misleading LIBOR submis- sions to the BBA and/or had not engaged in the practice of attempting to manipulate LIBOR such that it represented a different rate from that defined by the BBA (viz a rate measured at least in part by reference to choices made by panel banks as to the rate that would best suit them in their dealings with third parties)". Asplin J found that this was "essentially the same as Representation 1 and suffers from the same de- fects" but could have been "tailored in a similar way to LIBOR Representation 1".10

LIBOR Representation 4: "RBS did not intend in the future and would not in the future: make false or misleading LIBOR submissions to the BBA; and/or engage in the practice of attempting to manipulate LIBOR such that it represented a different rate from that defined by the BBA (viz a rate measured at least in part by reference to choices made by panel banks as to the rate that would best suit them in their dealings with third parties)". Asplin J concluded that this amounted "to a promise as to future conduct...not a statement of fact" and, as such, would not have been inferred by a rea- sonable representee.11

LIBOR Representation 5:12 "LIBOR was a rate which represented or was a proxy for the cost of funds on the interbank market for panel banks such as RBS".13 Asplin J concluded that the "alleged inference is highly technical and not necessarily accu- rate", such that it would not have been inferred by the reasonable representee.14

Asplin J also stated, obiter, that, had they been made, the alleged representations would have all been false on the basis that RBS had admitted trader manipulation of submissions in LIBOR currencies other than GBP. However, the evidence of the rele- vant PAG witnesses demonstrated that they had no understanding of the "extremely complex and intricate pleaded representations" and, therefore, even if they had been made, PAG could not be said to have relied upon those representations.15

In the alternative, PAG had also alleged fraudulent false representation16 and/or negli- gent misrepresentation,17 both of which were dismissed by Asplin J. In relation to the claim based on fraud, Asplin J found that PAG's cross-examination of the relevant RBS witnesses failed to establish that they intended PAG to rely on the alleged LIBOR Rep- resentations.18 In relation to the claim based on negligence, PAG's pleaded case was insufficient to make out one of the key components of negligent misrepresentation and, on that basis, this aspect of the claim also failed.19

To view the article in full click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.