THE LIBYAN INVESTMENT AUTHORITY v CREDIT SUISSE INTERNATIONAL

For summary judgment purposes, a claim relying on section 32 of the Limitation Act 1980 fails where the claimant has no realistic prospect of proving that fraud or concealment could not have been discovered with reasonable diligence before expiry of the primary limitation period.

Reasonable diligence is assessed objectively, in the context of the claimant’s circumstances, by reference to what a person carrying on the relevant business would do with adequate but not unlimited resources. The inquiry has two stages: when the claimant was put on notice of the need to investigate, and what a reasonably diligent investigation would have revealed. In fraud cases, the court accepted that the stricter Statement of Claim test was at least realistically arguable, but held that the issue should not be finally resolved on a summary application.

The Libyan Investment Authority brought claims concerning structured investment notes against Credit Suisse International, GLG Partners Asset Management Ltd, Frontier Investment Management Partners Ltd, Walid Mohamed Ali Al-Giahmi and Lands Company Ltd. It alleged that payments made through intermediaries concealed corrupt payments connected with the transactions.

Credit Suisse and GLG applied for summary judgment. The other defendants sought to set aside orders extending the validity of the claim form and permitting service out of the jurisdiction. The central issues were whether the claims were statute barred and whether section 32 of the Limitation Act 1980 gave the LIA a realistic prospect of avoiding that result. GLG also challenged the legal merits of claims in unjust enrichment, unconscionable receipt and tracing.

1. Limitation. The primary limitation periods had expired. Under section 32 of the Limitation Act 1980, the LIA therefore had to show a real prospect of establishing at trial that it could not, with reasonable diligence, have discovered the alleged fraud before 12 November 2013.
2. Summary judgment approach. The court applied the principles in Easy Air Ltd v Opal Telecom Ltd, as summarised and approved in TFL Management Services Ltd v Lloyds Bank Plc. The court could decide a short point of law or a factual issue where the evidence was sufficient, but should not conduct a mini-trial. Whether actual or constructive knowledge under section 32 could be decided summarily depended on the facts.
3. Reasonable diligence. Applying Paragon Finance Plc v DB Thakerar & Co and OT Computers Limited (In Liquidation) v Infineon Technologies AG, the inquiry was objective but context-sensitive. Personal characteristics such as naivety or lack of curiosity were irrelevant. The two questions were when the LIA was put on notice of the need to investigate, and what a reasonably diligent investigation would have revealed.
4. The LIA was on notice by no later than the end of July 2012. The relevant information included concerns about third-party payments, the board’s decision to investigate, the term sheets, Credit Suisse’s qualified assurances, the KPMG report and the Problem Asset Committee’s identification of potential third-party involvement.
5. The LIA had no realistic prospect of showing that reasonable enquiries would not have identified WMAG’s involvement before 12 November 2013. An interview with Mr Gheriani, and enquiries of Credit Suisse or GLGP, would have provided information sufficient to plead an inferential fraud claim. The position concerning enquiries of the SEC could not safely be resolved summarily, but that did not affect the result.
6. Other causes of action. The unconscionable receipt claims had no more than a fanciful prospect because the pleaded case did not establish that the LIA retained a proprietary interest in the money paid to Credit Suisse. The proprietary tracing claims also failed because GLGP and FIMP were alleged to have passed on the whole payment. The unjust enrichment claims were realistically arguable, including because liability could arise on receipt and the arrangements might constitute a sham or part of a single scheme.
7. Summary judgment was granted to Credit Suisse and GLGP. The orders permitting service out on FIMP, WMAG and LCL were set aside. The court did not decide the remaining grounds.