Swaps mis-selling litigation is not over yet, says David Pope
Limitation is looming large in swaps mis-selling litigation. Most of the swaps and other interest-rate hedging products (IRHPs) about which bank customers have complained were sold in or before 2008. The usual six-year limitation period, which generally runs at latest from the date of sale, has therefore expired in most cases. Any new mis-selling claim is likely to be met with a limitation defence. Many existing claims already have been.
The recent decision in Kays Hotels Ltd v Barclays Bank plc [2014] EWHC 1927 may have thrown customers a limitation lifeline, however. For Mr Justice Hamblen refused to strike out a mis-selling claim on limitation grounds even though proceedings began seven years after the IRHP in question was sold.
Facts of Kays Hotels
The customer in Kays Hotels ran a small hotel near Ipswich. In late 2005, it borrowed £1.34 million from Barclays and, as a hedge against its interest-rate exposure under the loan, it entered into a form of IRHP known as a collar. Under the terms of the collar, Barclays had to
