Court castigates BCCI liquidators' claim against Bank of England
| Published date | 01 October 2006 |
| Pages | 411-417 |
| Date | 01 October 2006 |
| DOI | https://doi.org/10.1108/13581980610711180 |
| Author | Joanna Gray |
| Subject Matter | Accounting & finance |
LEGAL AND REGULATORY COMMENTARY
Court castigates BCCI liquidators’
claim against Bank of England
Joanna Gray
University of Newcastle upon Tyne, Newcastle upon Tyne, UK
Abstract
Purpose – The purpose of this paper is to describe how BCCI liquidators’ claim against the Bank of
England has been castigated.
Design/methodology/approach – The paper outlines the facts surrounding this decision and the
action involved.
Findings – The UK’s longest running and most expensive civil litigation has been labelled a farce by
both the trial judge and the head of the judiciary.
Originality/value – The paper highlights how these proceedings raise fundamental questions about
the rule of law and the appropriateness of the use of legal technique to achieve redress for such
large-scale and high profile losses out of the failure of financial firms and how they also contain
cautionary lessons for the way in which regulators employ and use what are notions of “risk” and “risk
based financial regulation”.
Keywords Litigation, Legaldecisions, United Kingdom
Paper type Viewpoint
Three Rivers District Council & Ors and BCCI SA (In Liquidation) v. Governor &
Company of the Bank of England (High Court: Queens Bench Division: Commercial
Court: Mr Justice Tomlinson)
Date of Judgment: 12 April 2006
Facts
The background to this decision lies in the very lengthy, novel and complex
proceedings brought against the Bank of England (“the Bank”) and various of its
officers by the liquidators of BCCI SA (International). Those proceedings began in
1993 and were brought for misfeasance in public office in relation to the Bank of
England’s discharge of supervisory and regulatory responsibilities over the UK
operations of the BCCI banking group over a period which spanned 1980 (when
BCCI was first licensed as a deposit-taker in the UK under the Banking Act 1979)
through to 1991 when action was taken by the Bank, in tandem with other bank
supervisors overseas, to close the operations of BCCI. The liquidators claimed
damages on behalf of creditors of BCCI. They made extensive allegations of
wrongful conduct on the part of the Bank and its staff in relation to the taking of the
original decision to licence BCCI in the UK as a deposit-taker on the reliance and
assurance of regulators based in Luxembourg where BCCI SA was incorporated,
failure to revoke BCCI’s licence once the error of this decision became fully apparent
and then failure to act appropriately in order to protect the interests of depositors in
BCCI in the ensuing period until its closure in 1991, even though problems and
The current issue and full text archive of this journal is available at
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Court castigates
BCCI
411
Journal of Financial Regulation and
Compliance
Vol. 14 No. 4, 2006
pp. 411-417
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581980610711180
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