Legal commentary
| Pages | 293-300 |
| Date | 27 July 2010 |
| DOI | https://doi.org/10.1108/13581981011060844 |
| Published date | 27 July 2010 |
| Author | Joanna Gray |
| Subject Matter | Accounting & finance |
LEGAL COMMENTARY
Titan Steel Wheels Ltd v. Royal Bank of
Scotland Plc (High Court: Queen’s Bench
Division: Commercial Court:
Mr Justice David Steel)
Joanna Gray
Newcastle University, Newcastle upon Tyne, UK
Abstract
Purpose – The purpose of this paper is to report and comment on a High Court ruling where the
Court had to decide certain preliminary issues of law arising out of a mis-selling claim brought against
Royal Bank of Scotland Plc (hereafter “the Bank”) by Titan Steel Wheels Ltd (hereafter “Titan”)
following losses incurred on two Euro/Sterling derivative products provided to Titan by the bank in
June and September 2007.
Design/methodology/approach – The paper outlines the facts surrounding the cas e and
comments on the decision.
Findings – The Judge’s decision is given on three issues. The first issue – was Titan a “private
person”? The second issue – did the Bank act in an advisory role to Titan on the two transactions in
issue and hence owe a common law duty of care? The third issue – whether the Bank’s terms of
business were subject to the Unfair Contract Terms Act 1977?
Originality/value – This case offers interesting insights into the changing nature of the relationship
between major corporate users of the derivatives markets with the products traded and business
transacted in those markets. It also represents a classic attempt to use the legal system to reallocate
losses resulting from the ultimate uncertainty that besets every market place and simply reasserts that
ex ante contractual loss allocation agreed between commercial parties will not be lightly set aside.
Keywords Legal decisions,Banks, Derivative markets, Financialservices, Legislation
Paper type Research paper
Date of Judgment: 11 February 2010
Facts
The court in these proceedings had to decide certain preliminary issues of law arising
out of a mis-selling claim brought against Royal Bank of Scotland Plc (hereafter “the
Bank”) by Titan Steel Wheels Ltd (hereafter “Titan”) following losses incurred on two
Euro/Sterling derivative products provided to Titan by the bank in June and
September 2007. Titan was a manufacturing company making steel wheels for off road
vehicles with largely euro income and sterling cost base. It therefore had a need to protect
itself against any strengthening of sterling against the Euro and in 1997 had executed
a Treasury mandate with the Bank which covered (inter alia) foreign exchange
transactions and currency options. In order to resolve two of the three preliminary issues
to be decided arising from the claim the Court needed to determine and examine the exact
legal terms upon which the parties dealt with each other which required an examination
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1358-1988.htm
Legal
commentary
293
Journal of Financial Regulation and
Compliance
Vol. 18 No. 3, 2010
pp. 293-300
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581981011060844
To continue reading
Request your trial