April 29, 2013 6:15 pm

Libor damages test case against Barclays delayed until 2014

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The first British damages claim trial over the manipulation of Libor has been delayed until next year.

Barclays is being sued in a test case stemming from the wider Libor scandal which is being closely watched for its impact on other possible claims against banks involved in the manipulation of the benchmark interest rate.

The dispute centres on allegations made by Wolverhampton-based Guardian Care Homes that Barclays mis-sold them interest-rate swaps, which were pegged to the Libor benchmark rate that was being rigged. Barclays denies all the allegations.

A trial was due to begin in October but has now been delayed until next April to allow Barclays’ case to be heard by the Court of Appeal this summer.

Barclays will try to challenge last year’s decision by Mr Justice Flaux who allowed Guardian Care Homes to augment its claims to include the allegation of “false and fraudulent representation”.

The High Court on Monday was told by Tim Lord QC, acting for the claimants, that Barclays had set up a regulatory inquiry as well as another internal probe relating to employees known as the Libor Investigation Employee Review Committee (LIER).

Barclays had handed over disclosure of minutes from the LIER committee which had been set up by Barclays in mid 2012 – some of which had been redacted, the hearing was told.

In written arguments submitted to the court, the care home group claims that Barclays has now “conceded the existence of three Libor-related investigations and two Libor-related internal committees”.

About 200,000 documents are expected to be disclosed by Barclays and up to 20 witnesses could be called by the bank in the trial next year, which could last longer than six weeks, the hearing was told.

Mr Lord told the court that Barclays was demanding “micro details” from the care home group, which was “taking on the burden of a test case against one of the biggest banks in the world”.

In depth

Libor scandal

Analysis BIG PAGE Libor pfeatures

Regulators across the globe probe alleged manipulation by US and European banks of the London interbank offered rate and other key benchmark lending rates

Barclays paid a £290m fine in June when it became the first bank to settle allegations that it tried to manipulate Libor and other benchmark interest rates.

Guardian Care Homes had initially sued Barclays for up to £38m for alleged mis-selling of two interest rate swaps in 2007 and 2008. The operator of 27 care homes had bought the swaps to refinance two loans with Barclays.

Barclays’ Court of Appeal case is likely to be heard alongside another legal dispute in which Unitech, an Indian property company, was refused permission to add Libor claims to its lawsuit against Deutsche Bank.

Barclays said after the hearing it had obtained permission from the Court of Appeal to challenge Mr Justice Flaux’s ruling on the Libor claims.

However, in a statement Gary Hartland, chief executive of Guardian Care Homes, called the move by Barclays a “hugely opportunistic appeal”, which had been lodged five months after the original decision by the High Court.

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