Barclays Bank Plc v Svizera Holdings BV & Anor

Clear contractual wording may create a contractual estoppel preventing a party from alleging reliance on pre-contract representations, including alleged advice or assurances. In a commercial banking relationship, the existence of an advisory relationship does not itself establish a tortious duty of care. The court must examine the contractual allocation of responsibilities and risks, including provisions excluding fiduciary or advisory duties and restricting liability.

A collateral contract cannot be established where its alleged terms are unsupported by the documents and inconsistent with the principal contractual arrangements. Contractual provisions may also prevent a borrower from advancing otherwise available claims by way of set-off or counterclaim.

Barclays arranged a US$45 million syndicated facility for Svizera, with Maneesh acting as guarantor. After default, Barclays claimed the outstanding debt. The defendants alleged that Barclays had represented that it would obtain an INR/USD currency swap and relied on that allegation as misrepresentation, breach of collateral contract, breach of an advisory duty and breach of fiduciary duty.

The court considered whether any such representation had been made, whether the contractual documents created a contractual estoppel or excluded advisory and fiduciary obligations, whether a collateral contract existed, and whether the defendants could deploy their claims as a defence or counterclaim.

1. Disposition. The defences failed and the counterclaim was dismissed. Barclays was entitled to recover the sums due under the Facility Agreement from Svizera and Maneesh, together with contractual default interest, fees and enforcement costs.
2. Representation and reliance. On the evidence, Barclays had not represented that it would procure an INR/USD currency swap. The documents referred only to a USD/CHF cost-reduction swap and an interest-rate swap. In any event, the defendants had entered the Facility Agreement on their own independent judgment. Clause 10.3(c) of the Mandate Letter therefore created a contractual estoppel preventing reliance on alleged representations.
3. Advisory and fiduciary duties. A commercial bank does not ordinarily owe fiduciary or advisory duties merely because its employees provide information, reassurance or commercial assistance. The parties’ relationship was defined by the Mandate Letter, Fee Letter, Notification Letter and Facility Agreement. Those documents expressly excluded an advisory or fiduciary relationship, and no assumption of responsibility could be inferred. Clause 10.3(c) also barred reliance on alleged advice. The late attempt to derive a duty from the syndication provisions by ‘reverse construction’ was rejected.
4. Collateral contract. The alleged collateral agreement was unsupported by documentary or other evidence, its terms could not properly be implied, and it was inconsistent with the Fee Letter’s right of first refusal and the Facility Agreement’s exclusion of obligations outside the Finance Documents. The contractual liability exclusions provided a further answer.
5. Other contractual effects. The alleged claims were different legal labels attached to the same failed factual case. Clause 28.6 of the Facility Agreement also prevented the defendants from using their allegations as set-off or counterclaim against Barclays’ debt claim.