Judgment in the case of PCP Capital Partners LLP and PCP International Finance Limited v Barclays Bank Plc was handed down on 26 February 2021 following the hybrid trial heard between June and October 2020.
The litigation concerned the recapitalisation of Barclays at the height of the global financial crisis in late 2008 by the State of Qatar’s sovereign wealth entity, an investment vehicle of the then Qatari Prime Minister, Sheikh Hamad, and by three special purpose vehicles owned, at the time of negotiations, by PCP.
Mr Justice Waksman found that, during negotiations in October 2008, Barclays (acting through Mr Roger Jenkins) made representations to PCP (namely to its principal, Ms Amanda Staveley) to the effect that it was receiving the same deal as Qatar on several occasions (the “Same Deal Representations”).
The Same Deal Representations were falsified by: i) the existence of an undisclosed “Advisory Services Agreement” by which an additional £280 million was paid to Qatar; ii) an introduction/arrangement fee of £66 million paid to Qatar for the introduction of Sheikh Mansour Bin Zayed Al Nahyan (who had, in fact, been introduced into the capital raising by PCP); and iii) a bilateral unsecured loan of US$3 billion provided to Qatar at the same time as the Qatari participation in the capital raise.
The Court further found that Mr Jenkins, on the morning the capital raising was announced to the market, made a further false representation to PCP to the effect that the £66 million related to the earlier capital raising in June 2008 (the “June Fee Representation”).
Contrary to Barclays’ case at trial, Mr Justice Waksman concluded that Barclays made both the Same Deal and June Fee Representations knowing of their falsity, with the intention that PCP would rely on the representations and PCP did, in fact, rely upon the representations.
Having determined that Barclays made fraudulent misrepresentations to PCP, the Court considered causation and quantification of loss. In this context, Mr Justice Waksman addressed the principles concerning loss of a chance and the “fair wind” principle.
As to the determination of PCP’s loss, the Judge rejected Barclays’ case that PCP was a mere agent or adviser and found that PCP was a prospective investor in its own right. Further, had the misrepresentations not been made, PCP would have discovered the truth and would have secured £615 million of additional value to its investment. The Court also accepted that, as a matter of historic fact, PCP had agreed a remuneration structure with Sheikh Mansour at a Majlis in early November 2008. This remuneration structure was conditional upon PCP raising debt finance for the investment.
However, the Court concluded that – notwithstanding the additional value of £615 million and in the conditions prevailing in November 2008 – PCP would not have succeeded in raising sufficient debt finance and would still, in the counterfactual scenario, have lost its interest in the transaction. For this reason, notwithstanding the fraud perpetrated upon PCP, Barclays was not liable in damages.
Joe Smouha QC, James Collins QC and Owen Lloyd (together with Robert Weekes of Blackstone Chambers) acted for PCP instructed by Richard East, Khaled Khatoun and Yasseen Gailani at Quinn Emanuel Urquhart & Sullivan.
The Judge’s executive summary of the judgment can be found here and the full judgment can be found here.
