By Alison Lowe
Nassau Guardian Business Editor
NASSAU, Bahamas -- The Bahamas Court of Appeal has ruled against an application by UBS (Bahamas) to appeal a decision of the court to the Privy Council in London, saying the case at hand is not one of general public importance.
UBS had sought leave to appeal to the Privy Council the Court of Appeal’s ruling in July 31, 2013, in which it ruled in favour of Standard Chartered Bank (Switzerland) in a matter relating to a $34.2 million claim by Standard Chartered Bank against UBS (Bahamas).
In that ruling, reviewing a decision of the chief justice, which had struck out Standard Chartered’s claim, Justices Anita Allen, Christopher Blackman and Neville Adderley sent the case back to the Supreme Court for retrial.
The judges said at the time that the chief justice’s ruling on the matter was “unsafe”, and based on “incomplete evidence”.
However, UBS (Bahamas) had, according to the most recent ruling from the Court of Appeal, sought to challenge its decision to send the matter back for a re-trial on numerous grounds that “for the most part, revolve around this court’s purported failure to consider and make a determination on the facts, and its purported failure to apply the relevant law.”
In response, the Court of Appeal held that the issue at hand is not “one of general public importance” and they will only be “properly answered” if the retrial that was initially ordered by the Court goes ahead.
“We believe it would be premature to send the matter to the Privy Council when all of the facts have not been established,” said Justices Anita Allen, Stanley John, and Abudulai Conteh.
The case revolves around a number of shares held as collateral for a loan by UBS (Bahamas) which the Bahamas office of the Swiss bank had agreed to transfer to Standard Chartered Bank (Switzerland), according to court documents.
The shares were beneficially owned by a mutual customer of the two banks, CIF, in 2008, who owed UBS (Bahamas) “in excess of $30 million”.
According to the Court of Appeal judgment on the matter, an agreement to transfer the shares from UBS (Bahamas) to Standard Chartered (Switzerland) took place via the SWIFT messaging system in November 2008, after CIF obtained a loan from Standard Chartered Bank to pay its debt to UBS (Bahamas).
The two banks agreed to transfer the shares to Standard Chartered (Switzerland) once the Swiss bank sent $34.2 million – the amount of its loan to CIF to cover its debt to UBS.
On November 12, 2008, Standard Chartered (Switzerland) transferred the funds to UBS (Bahamas) and UBS (Bahamas) began initiating the process of transferring the shares – comprising 98,068 shares in Kingate Global Fund Limited and 36,356.58 shares in Thema Fund Limited.
However, in the meantime, the Bernie Madoff fraud led to a collapse in the value of the shares and a suspension of trading in them.
“The value of the shares collapsed as a result of the well-publicized Bernie Madoff fraud. On the 12th of December, 2008, before the shares were transferred, trading in the shares were suspended and this action was commenced on the basis that the shares could no longer be transferred,” said the judgment on Standard Chartered’s appeal against the chief justice’s ruling.
“The plaintiff (Standard Chartered) had requested the return of the $34.2 million on the grounds that as the shares had not been and could no longer be transferred to it, the condition for payment had not been satisfied and therefore the plaintiff said it was entitled to the return of its money.”
Standard Chartered (Switzerland) asserted that since the shares were not transferred following its transfer of $34.2 million to UBS, the “consideration for the payment under the contract had wholly failed”.
However, UBS said that “it had performed all that was required of it under the contract”.
Republished with permission of the Nassau Guardian