CF Partners (UK) LLP v Barclays Bank Plc and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hildyard,MR JUSTICE HILDYARD |
| Judgment Date | 24 September 2014 |
| Neutral Citation | [2014] EWHC 3049 (Ch) |
| Docket Number | Case No: HC11C03443 |
| Court | Chancery Division |
| Date | 24 September 2014 |
[2014] EWHC 3049 (Ch)
The Honourable Mr Justice Hildyard
Case No: HC11C03443
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Tim Lord QC, Orlando Gledhill and Richard Eschwege (instructed by Reynolds Porter Chamberlain LLP) for the Claimants
Ewan McQuater QC, David Quest QC and Sandy Phipps (instructed by Freshfields Bruckhaus Deringer LLP) for the Defendants
Hearing dates: 16–17 May, 20–24 May, 3–7 June, 17–21 June, 24–28 June, 1–5 July, 8–10 July, 23–26 July 2013
TABLE OF CONTENTS
INTRODUCTION ………5
Nature of the claim ………5
CFP's claims ………7
Barclays' defence ………7
Tricorona's defence and counterclaim ………8
Ambit of the hearing ………9
Overall summary of main issues ………10
Factual background: carbon trading and the market ………11
Registration 15
Monitoring, Verification and Certification ………17
CER Issuance ………17
Forwarding.17 EU ETS ………18
Primary and secondary markets ………19
Large Hydro CERs ………21
Overview of applicable legal principles: (a) duty of confidence and (b) obligation of exclusivity ………25
Duty of confidence: law and equity ………25
Obligation of exclusivity ………29
THE PARTIES ………33
CF Partners ………33
Tricorona ………34
Barclays ………34
THE WITNESSES ………35
CFP's factual witnesses ………
Mr Navon ………35
Mr Rassmuson ………36
Mr Nicholls ………36
Mr Goldstein ………37
Tricorona's factual witnesses ………37
Mr von Zweigbergk ………37
Mr Holmgren ………39
Ms Patel ………39
Mr Joe Allen Gold ………41
Mr Martens ………42
Mr Redshaw ………43
Mr Zintl ………44
Mr Lim ………44
Mr Manahilov ………45
Mr McKay ………45
Mr Ord ………45
Dr Rhian-Mari Thomas ………46
Mr William O'Malley 46 Missing persons ………47
Dr Swift ………47
Mr Moe Moe Oo ………48
THE PARTIES' EXPERIENCE IN THE CARBON SPACE ………49
CFP's experience and expertise ………49
Tricorona's experience and expertise ………52
Barclays' experience and ambitions in the "Carbon Space" ………54
Barclays' ambitions in primary market ………55
Barclays' approach to Tricorona in 2007 ………58
ARCTIC FOX: SEQUENCE OF EVENTS ………70
CFP's identification of Tricorona's potential ………70
CFP/Tricorona Confidentiality Agreement ………74
The excel data dump ………75
CFP's Spreadsheets ………78
Expressions of Interest ………79
Presentation of Project Arctic Fox to Barclays ………87
The structure of the contractual arrangements between CFP, IVC and Barclays ………87
Barclays' Global Confidential Information and Chinese Walls Policy ………90
WAS BARCLAYS IN A POSITION OF CONFLICT WHICH IT WAS OBLIGED BUT FAILED TO DISCLOSE? ………92
Was Barclays conflicted by its previous relationship with Tricorona? ………94
What steps did Barclays take to determine whether it was conflicted? ………95
Did Barclays' commitment to exclusivity negate any duty to reveal any conflict? ………
Relevance of Barclays' failure to disclose its conflict of interest ………100
Is it relevant that CFP never was formally a client of Barclays? ………101
Content of duties: were Chinese Walls required? ………101
Scope of Chinese Wall policy: is it restricted to preventing insider dealing? ………103
Had Ms Patel any special exemption or permission? ………109
The Over-the-Wall memos ………
Effect of the Policy and the memo ………111
REACTION TO AND PROGRESS OF PROJECT ARCTIC FOX AFTER ITS INTRODUCTION TO BARCLAYS ………111
Exchange of information between CFP and Barclays ………111
How Barclays originally assessed Project Arctic Fox/Carbonara ………112
Barclays' (incorrect) perception of Large Hydro prior to Project Arctic Fox ………113
Changing perceptions of value ………117
Expressions of Interest confirm potential demand ………121
Exchange and development of information ………124
Barclays' gradual acceptance in stages of value of Large Hydro for debt purposes ………124
Tricorona Management's contribution ………126
Reaction to Project Arctic Fox within Barclays when introduced ………127
CHRONOLOGY: NOVEMBER 2008 TO APRIL 2009 ………128
The Singapore meeting and events between November 2008 and January 2009 ………128
Barclays and Tricorona exchanges after the Singapore meeting ………131
Talk turns to termination of the relationship between CFP and the Tricorona Management ………137
January 2009: the beginnings of Barclays' strategic partnership with Tricorona ………138
The development of the 'strategic relationship' between Barclays and Tricorona ………143
First phase: January 2009 ………143
CFP clarifies that its understanding is that "day-to-day hedging" is permissible ………154
Summary of position at end of January 2009 ………159
Hedging discussions between Barclays and Tricorona: end of January to March 2009 ………159
Summary of position as at end of February 2009 ………163
The path to termination of exclusivity ………164
Summary of prospects for Project Arctic Fox by April 2009 ………167
The negotiations with respect to the Exclusivity Release and its agreed terms: 21 March 2009 to 2 April 2009 ………170
The Exclusivity Release: the dispute as to its terms, intended meaning and effect ………174
(1) Substance and effect of collateral exchanges ………177
(2) Interpretation of Exclusivity Release (as presently formed) ………178
(3) Was the Exclusivity Agreement the product of common or unilateral mistake? ………179
(4) Is Barclays estopped from relying on the Exclusivity Release as permitting its acquisition of Tricorona on its own account? ………179
(5) Is the Exclusivity Release liable to be rescinded? ………180
Conclusion on exclusivity ………181
CHRONOLOGY: APRIL TO AUGUST 2009 ………181
Project Clearwater ………181
Project Silverback ………185
Project Pomodoro ………188
Close co-operation between Barclays and the Tricorona Management in Project Pomodoro and the pretence that only public information was exchanged ………192
Aftermath of Project Pomodoro, the commencement of proceedings and Project Rose ………196
CFP rebuffed and commence proceedings ………197
Project Rose ………198
APPLICATION OF THE LAW TO THE FACTS AND CLAIMS ………199
Were the Defendants in breach of obligations of (a) exclusivity (b) confidence? ………199
Breach of exclusivity? ………200
Claim against Barclays ………200
Claim against Tricorona for inducing breach by Barclays of exclusivity ………201
CLAIMS BASED ON ABUSE OF CONFIDENTIAL INFORMATION ………207
Source, scope and duration of equitable duty ………207
Did CFP provide to Barclays information having the quality of confidentiality? ………211
The "Big Idea" ………212
Had the spreadsheets the quality of confidence? ………219
The confidentiality of the Expressions of Interest ………223
Conclusions as to the confidentiality of the overall package presented by CFP ………224
How influential and valuable was the material? What was it that caused Barclays to re-evaluate Tricorona? ………228
Did Barclays misuse the confidential information, and if so, how and when? ………232
But no causal link or continuum ………241
Perception within Barclays of Pomodoro; and its alleged misuse of 'individual pieces of information' ………244
CLAIM AGAINST TRICORONA ………254
Claim by CFP against Tricorona based on misuse of confidential information ………254
Claim that Barclays induced Tricorona to breach confidentiality ………259
JOINT LIABILITY CLAIM ………262
UNCLEAN HANDS ………263
TRICORONA'S COUNTERCLAIM ………266
Use of price and technical information in the Madushan Project ………266
Alleged misuse in Vattenfall Report ………268
Use of Tricorona ERPAs ………270
REMEDIES ………272
Remedies: as between CFP and Barclays ………272
Account of profits or damages? ………272
Assessment of damages ………274
Wrotham Park approach ………277
Nature of the exercise ………277
Relevance of the parties' evidence as to their likely negotiating position ………279
The subject-matter of the negotiation ………280
Nature and extent of the rights to be bought out ………282
Timing of hypothetical negotiation ………283
Context of hypothetical negotiation ………286
Strengths and weaknesses ………289
Drivers in the negotiation ………291
Form of compensation ………294
Alternative basis: some form of brokerage fee ………296
Share of upside on portfolio sales: brokerage fee proxy ………297
Cross-checks ………300
Loss of a chance ………302
CONCLUSION ………302
APPENDIX A ………304
Agreed Statement of Facts ………304
APPENDIX B ………313
Dramatis Personae ………313
APPENDIX C ………316
Agreed List of Issues ………316
APPENDIX D ………320
Glossary of Key Terms ………320
INTRODUCTION
Nature of the claim
By this claim, CF Partners (UK) LLP ("CFP") seeks compensation for the alleged breach of an exclusivity agreement, and the misuse of confidential information, in the context of the pursuit and acquisition by the first defendant, Barclays Bank PLC ("Barclays") of the second defendant, a body corporate called Bryggpipan AB (formerly known as Tricorona AB) ("Tricorona").
Put very shortly, CFP contends that Barclays used information that CFP presented to it as a client seeking lending facilities and M&A advice to take and exploit CFP's opportunity for its own profit by itself acquiring Tricorona.
Tricorona operated in the carbon credits market and had a large portfolio ("the Tricorona Portfolio") of tradable instruments known as Certified Emission Reductions ("CERs"). CERs essentially comprise rights to emit carbon. Controls and restrictions under international protocols or treaties in respect of the emission of carbon or greenhouse gases have in effect required emitters of such gases to acquire such rights in order to (as it were) "frank" their emissions.
CFP had identified the prospect of considerable fees and capital profit from the acquisition and monetisation of...
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