Tom Hayes & Anor v R

The LIBOR and EURIBOR definitions required a submitting bank to assess a single borrowing rate: the lowest rate at which the relevant bank could borrow. Different honest judgments might produce different answers, but this did not create a permissible range from which a submitter could select a rate for trading advantage.

The meanings of the definitions were questions of law for the court. The United States decision in United States v Connolly and Black concerned evidential sufficiency under a different procedural regime and did not undermine the English authorities. A CCRC reference does not permit unrelated grounds to be reopened without leave, particularly where they were available on an earlier appeal.

Hayes and Palombo, derivatives traders employed by major banks, were convicted of conspiracy to defraud in connection with dishonest manipulation of, respectively, Yen LIBOR and EURIBOR submissions. Their earlier conviction appeals had been dismissed, although Hayes’s sentence had been reduced.

In 2023 the Criminal Cases Review Commission referred their convictions after the United States Court of Appeals decision in United States v Connolly and Black. The references raised the possibility that the United States court’s approach to LIBOR might render the convictions unsafe.

Hayes contended that commercial considerations were not absolutely prohibited and that the jury had been wrongly directed. Palombo advanced analogous EURIBOR grounds and a legal-certainty ground under Article 7. The central question was whether Connolly and Black displaced the established English construction of the benchmark definitions.

1. Appeals dismissed. The only ground related to the CCRC references was Palombo’s first ground. The court rejected it on the merits. Hayes’s first and second grounds, Palombo’s second and third grounds, were unrelated to the reasons for the references. Leave under section 14(4B) was refused.
2. The LIBOR definition required the submitting bank’s genuine assessment of the lowest rate at which it could borrow in reasonable market size. The EURIBOR definition likewise required the best offered price between prime banks. Each definition required an assessment of one figure. Although the exercise involved judgment and different submitters could honestly reach different figures, that did not permit a submitter to choose within a range by reference to trading advantage. Such an influence was inconsistent with an independent benchmark and with the definitions’ purpose.
3. The English LIBOR and EURIBOR authorities were correctly decided. Commercial advantage could not form part of the assessment required by either definition. The evidence of individual market participants’ differing understanding was relevant to knowledge and dishonesty, but not to the legal construction of the definitions.
4. United States v Connolly and Black was distinguishable. It decided whether the Government’s evidence was sufficient under Federal Rule 29, treating the meaning of the LIBOR instruction as a factual matter for the jury. It did not determine the construction of LIBOR under English law and did not engage the English authorities. It therefore created no conflict with them.
5. The court was bound by its earlier decisions, subject only to the recognised and narrowly exercised exceptions to stare decisis. The proposed unrelated grounds had either been available and not pursued on the prior appeals, or had already been fully rejected. The court’s further observations confirmed that the benchmark definitions were binding agreements akin to legislation, so their construction was for the judge rather than the jury.

• Court of Appeal (Criminal Division): On CCRC references, dismissed both appeals: [2024] EWCA Crim 304.
• Court of Appeal (Criminal Division): Dismissed Hayes’s conviction appeal, but allowed his sentence appeal and substituted 11 years’ imprisonment: R v Hayes [2015] EWCA Crim 1944; [2018] 1 Cr. App. R. 10.
• Court of Appeal (Criminal Division): Dismissed Palombo’s conviction appeal: R v Bermingham and Palombo [2021] 4 WLR 113.
• Crown Court at Southwark: Hayes was convicted in 2015 of eight counts of conspiracy to defraud. Palombo was convicted on retrial in 2019 of conspiracy to defraud concerning EURIBOR.