The bar for establishing claims of undue influence & unconscionable bargain remains high, say Nicholas Fidler & Emily Tearle
- In circumstances where commercial parties transact with each other, the courts remain reluctant to intervene, even in circumstances where, on the face of the transaction, one of the parties is disadvantaged.
The recent High Court Chancery Division judgment in The Libyan Investment Authority v Goldman Sachs International [2016] EWHC 2530 (Ch), [2016] All ER (D) 120 (Oct) provides a useful reminder of the law of undue influence. It confirms that the bar for establishing such a claim remains high for commercial parties.
The trades
In bringing this claim, the Libyan Investment Authority (LIA) sought to unwind nine trades worth around US$1.2bn which it had entered with Goldman Sachs during 2008. The trades were synthetic leveraged derivative trades whereby LIA paid Goldman Sachs premiums in exchange for exposure to shares in underlying companies. Leverage enabled LIA to gain exposure to significantly more shares than could have been bought with the premiums. No shares were acquired in the transactions, but if the underlying share prices rose by the maturity
