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Secure Capital v Credit Suisse: Difference between revisions
Secure Capital v Credit Suisse (view source)
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In {{casenote|Secure Capital|Credit Suisse}} [2017] EWCA Civ 1486: A bearer security held as a global note by a common depositary on behalf of clearing systems which has a [[Contracts (Rights of Third Parties) Act 1999]] provision excluding the right of the end [[noteholder]] (in the [[clearing system]]s) to sue the issuer is enforceable according to its terms. The governing law is the law in which the contract is expressed to be governed and not that whre trhe instrument happens to be situated (in this case in a clearing system in {{t|Luxembourg}}). | In {{casenote|Secure Capital|Credit Suisse}} [2017] EWCA Civ 1486: A bearer security held as a global note by a common depositary on behalf of clearing systems which has a [[Contracts (Rights of Third Parties) Act 1999]] provision excluding the right of the end [[noteholder]] (in the [[clearing system]]s) to sue the issuer is enforceable according to its terms. The governing law is the law in which the contract is expressed to be governed and not that whre trhe instrument happens to be situated (in this case in a clearing system in {{t|Luxembourg}}). | ||
Interesting observation though: the direct custodian, who would be able to sue, by dint of its back-to-back custodial relationship with the client would not suffer a loss, so even if it did sue, it would not be able to recover. | |||
:''56. The only justification advanced by Secure Capital is that, unless the law of the settlement system is identified as the proper law, there will be no-one able to recover substantial damages in {{t|contract}} for breach of the misleading statements term, thus creating a [[lacuna]] and conferring immunity on Credit Suisse as the issuer. I emphasise “in contract” because it is not suggested that a claim in {{t|tort]], if sustainable, would be similarly barred.'' <br> | |||
So wait, ''what''? The court is basically acknowledging that it is impossible for ''anyone'' to recover in contract for a breach of a bearer security held in a clearance system, since the proximate holder is obliged only to pass on to the ultimate holder what it receives, so it is "perfectly hedged". | |||