Farhaz Khan and Kate Holderness act for Forex broker granted summary judgment in c.£9m index swaps dispute

Today, the Commercial Court (Richard Salter QC, sitting as a Deputy Judge of the High Court) handed down summary judgment in IS Prime Limited v TF Global Markets UK Ltd [2022] EWHC 609 (Comm), a long running dispute between international forex brokers. The defendants, part of the Think Markets group, were granted summary judgment in respect of part of the claim advanced by IS Prime alleging breach of a qualified exclusivity agreement contained in a Liquidity Addendum agreed between the parties, in respect of the trading of index swaps between December 2017 and January 2020 (the relevant period of exclusivity).

By way of background to the dispute, the Liquidity Addendum was agreed and negotiated alongside an asset purchase and sale agreement agreed between US affiliates of IS Prime and of Think. In that agreement (amongst other things), one such affiliate of IS Prime agreed to buy and an affiliate of Think agreed to sell certain parts of its business and assets. The consideration for that sale included the agreement of the Liquidity Addendum. IS Prime alleges that Think breached the exclusivity terms of the Liquidity Addendum between 19 January 2017 and 19 January 2020 by using the services of other brokers, in respect of spot FX, FX derivatives (CFDs) and index swaps.  The defences advanced by Think (apart from that which is the subject of the application) include a claim to set aside the Liquidity Addendum on the grounds of fraudulent misrepresentation, and a claim that IS Prime acted in breach of contract by taking risk and making a profit through the application of a spread mark-up, in circumstances where IS Prime had promised and agreed to provide a matched principal broker service. Think also asserts that IS Prime is not entitled to enforce the exclusivity terms in relation to certain products or in relation to certain parts of the three-year period.

The summary judgment application related to the claim for alleged breach of the agreement related to index swaps, and the period from 18 December 2017 onwards on the basis that, by an email and documents sent on 8 December 2017, IS Prime stated that it was transferring its index swap business to a Hong Kong affiliate with effect from 18 December 2017, and thereafter ceased itself to trade index swaps, thus discharging Think from any continuing obligation under the Liquidity Addendum in relation to that class of product. On IS Prime’s case, it estimated Think was party to c.USD$250 billion notional value of index swap trades with third party brokers over the whole of the exclusivity period, which equated to c. USD$9 million, in lost revenue for IS Prime in the period after December 2017.

In granting summary judgment, the Deputy Judge accepted Think’s argument that, pursuant to clause 2.3 of the Liquidity Addendum, Think “may trade all transactions that are a class of Available Product with third party if IS Prime states that it does not trade that class of Available Product” and the necessary statement was to be found in the Client Communication Letter attached to the December email which says in unequivocal terms that “as of Monday 18 December 2017, all index swap transactions will be entered with IS Prime Hong Kong Limited instead of IS Prime Limited in London”.

The judgment can be found here.

Farhaz Khan and Kate Holderness acted for the successful defendants, instructed by Stephen Elam and Kajal Patel of CYK.

Farhaz will be appointed Queen’s Counsel on 21st March 2022.