Dahabshiil Transfer Services Ltd v Barclays Bank Plc
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henderson |
| Judgment Date | 05 November 2013 |
| Neutral Citation | [2013] EWHC 3379 (Ch) |
| Docket Number | Case No: HC13E04267 |
| Court | Chancery Division |
| Date | 05 November 2013 |
[2013] EWHC 3379 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building, Royal Courts of Justice
Fetter Lane, London, EXC4A 1NL
Mr Justice Henderson
Case No: HC13E04267
Case No: HC13E04616
Mr Alan Maclean QC and Ms Sarah Love (instructed by Shepherd and Wedderburn LLP) for Dahabshiil Transfer Services Ltd
Mr Timothy Mousley QC and Miss Sukwinder Dhadda (instructed by Cubism Law) for Harada Ltd and BCG Ltd
Mr Mark Brealey QC and Ms Sarah Ford (instructed by Simmons & Simmons LLP) for Barclays Bank Plc
Hearing dates: 15 and 16 October 2013
Introduction
The basic issue on these applications for interim injunctions, which I heard on 15 and 16 October 2013, is whether the defendant Barclays Bank Plc ("Barclays") should until trial or further order be restrained from terminating the supply of banking services to the claimants, or (which in substance amounts to the same thing) should be ordered to continue to supply them with such services. Each of the claimants carries on a "money service business", defined in the Money Laundering Regulations 2007 (SI 2007 No. 2157, Reg. 2(1)) as:
"an undertaking which by way of business operates a currency exchange office, transmits money (or any representations of monetary value) by any means or cashes cheques which are made payable to customers."
Following an internal review in late 2012 and early 2013, Barclays decided that it wished to reduce its exposure to this sector. The implementation of that decision forms the background to the present applications.
There is no dispute that Barclays is contractually entitled to terminate its provision of banking services to each of the claimants. Like any other private business, Barclays is entitled to choose its customers. Although heavily regulated in the public interest, banks are under no public law duty to make their services available to particular categories of customer. The injunctions which the claimants seek do not depend on any actual or threatened breach of contract by Barclays. Instead, the claimants contend that by giving them notice of its intention to withdraw banking services from their businesses Barclays has acted (or is threatening to act) unlawfully, because (put shortly) Barclays is alleged to be in a dominant position in the market for the provision of banking services to money service businesses, either generally or in relation to the particular sector in which the relevant claimant operates, and by ceasing to provide such services without objective justification Barclays would be abusing its dominant position contrary to Article 102 of the Treaty on the Functioning of the European Union ("TFEU") and the Chapter II prohibition in the Competition Act 1998. That is the sole basis on which the claimants say they are entitled to interfere with the contractual freedom which Barclays would otherwise undoubtedly enjoy to terminate their banking relationship.
Although I heard the three applications together, and they raise a number of common or related questions of law and fact, I should stress at the outset that one of the claims is entirely separate from the other two.
Dahabshiil Transfer Services Limited ("Dahabshiil") has for many years carried on an international money transfer and remittance business. The main focus of its activities is the Horn of Africa and, in particular, Somalia where it has over 280 payment outlets. Dahabshiil issued its claim form against Barclays on 24 September 2013, seeking a declaration, damages and injunctive relief. Its case was fully pleaded in the attached particulars of claim, settled by leading and junior counsel (Mr Alan Maclean QC and Ms Sarah Love). On the same date Dahabshiil issued an application for injunctive relief, returnable on 30 September (the last day of the Long Vacation). Dahabshiil's solicitors are Shepherd and Wedderburn LLP.
The other two claimants, Harada Limited ("Harada") and Berkeley Credit and Guarantee Limited ("BCG"), are commercially related to each other and (as I understand it) under common ultimate management and control, although they are incorporated in different jurisdictions (Harada in the Republic of Ireland, BCG in the British Virgin Islands) and they carry on separate businesses. Harada is a medium sized provider of bureau de change facilities to members of the public, operating from six locations in Central London and Oxford. BCG's main business is pawnbroking, which it carries on at some 12 shops in and around London. Pawnbroking is not a money service business, but some of BCG's shops also offer bureau de change services, although these form a relatively small part of the company's overall business. Both companies have their UK office at 85 Cromwell Road, London, SW7.
On 23 September 2013 Harada and BCG, through their London solicitors Cubism Law, issued an application notice in the Chancery Division seeking an interim injunction requiring Barclays to reinstate the provision of banking services to Harada, and to continue providing services to BCG, in each case pending trial or further order. The application was again made returnable on 30 September. No claim form had yet been issued, but the application notice said that the order was required "to prevent [Barclays] from abusing a dominant position in a market or markets for the provision of banking services to money service businesses and to prevent the Claimants from suffering irreparable loss pending trial". The application was supported by a witness statement of Jennifer Pollock, who is the legal officer for both companies with responsibility for their legal and compliance issues.
On 30 September the two applications came before Warren J, who ordered an expedited hearing to be listed on 15 October for half a day, with a timetable for evidence in the meantime. Barclays agreed to reactivate Harada's account, and to continue to provide all three claimants with the same banking services as before, until close of business on 16 October.
By way of evidence, Dahabshiil principally relies on two witness statements of its chief executive officer, Mr Abdirashid Mohamed Duale, and an expert report on definition of the relevant market by Dr Iestyn Williams, a professional economist and partner at RBB Economics LLP, a consultancy specialising in competition economics analysis. Further evidence in reply was filed on behalf of Dahabshiil by Mr Adam Matan, who is a director of the Anti-Tribalism Movement, a registered non-profit organisation based in London and Mogadishu that provides educational and other services to the Somali community; by Mr Abdul Rahman Awl, the vice chairman and a non-executive director of Dahabshil Bank International; and by Mr Ajay Chowdhary, who is a strategic adviser for Dahabshiil.
The evidence on behalf of Harada and BCG comprises, apart from the statement of Ms Pollock which I have already mentioned, three statements by Mr Costas Haji-Georghiou, who describes himself as the director of BCG.
Barclays relies on the same evidence in answer to both applications. It is contained in: (a) two witness statements of Mr Andrew Reid, who is a managing director at Barclays and global head of its Non Bank Financial Institutions ("NBFI") team; (b) a statement by Ms Barbara Ann Wastle, who is the Head of Financial Crime for EMEA at Barclays; (c) an expert report on the money laundering and regulatory risks involved in the provision of banking services to money service businesses by Mr Brian Dilley, a partner in KPMG LLP who is the global head of anti-money laundering ("AML") services and a Fellow of the Institute of Chartered Accountants: and (d) an expert report by Mr Alan Overd, a vice president in the European competition practice of Charles River Associates, which answers Dr Williams' evidence on a provisional basis and expresses some views on whether Barclays' behaviour constitutes an abuse of a dominant position.
The material contained in the second exhibit to Mr Reid's first statement, which relates to the internal review conducted by Barclays, is confidential, and its disclosure is confined to a confidentiality ring agreed between Barclays and Dahabshiil. For the purposes of this judgment it is unnecessary for me to refer in any detail to the contents of this exhibit, and I will therefore confine my references to general summaries of matters contained in it, or to specific matters which were mentioned in open court without objection from Barclays.
Thus it was that the two applications came on for hearing before me on 15 October. Dahabshiil was represented by Mr Maclean QC and Ms Love, while Harada and BCG were represented by Mr Timothy Mousley QC and Miss Sukwinder Dhadda. Barclays was represented by Mr Mark Brealey QC and Ms Sarah Ford, instructed by Simmons & Simmons LLP. The half day time estimate proved to be seriously inadequate, and the hearing in fact lasted for one and a half days, at the end of which I reserved judgment. During the hearing, Barclays agreed to continue to provide banking services to all three claimants on the existing basis until at least one day after I gave judgment.
By an apparent oversight, which I confess I found surprising, Harada and BCG had still neglected to issue a claim form by the date of the hearing. I required this omission to be rectified before the close of business on 17 October. This was duly done, and on 18 October I received a brief Note from Barclays' legal team commenting on Harada's and BCG's claim form and particulars of claim, which in turn prompted a Note in response from Dahabshiil on 21 October.
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