Cases & Deals

Standard Bank successfully defends against US$16m claim relating to valuation of emerging markets debt under forward sales contracts

Clients Standard Bank Plc

Jones Day represented Standard Bank Plc in its successful defense of a US$16m claim brought under the close-out and accounting provisions of a forward sale agreement following Socimer's default. The claim concerned the valuation (including Standard Bank's duties as to valuation) of a portfolio of emerging markets bonds financed under the agreement, but to which values were not ascribed at the time of default. The Court at first instance ruled that a term was to be implied into the contract requiring an objective and reasonable valuation, ignoring Standard Bank's unchallenged witness evidence as to the value they would have given the bonds had they valued them at the time of default. However, the Court of Appeal, overturning the judgment at first instance in its entirety, ruled that no such term was to be implied into the contract, and that the correct test was a subjective one being the values that Standard Bank would have ascribed to the bonds. Standard Bank's factual evidence as to valuation, which was not challenged by Socimer at trial, was accepted in full by the Court of Appeal. As a result, the relevant account showed a balance of US$1.2m in Standard Bank's favour.

Socimer International Bank v. Standard Bank