Unsurprisingly for a high-profile claim against a global investment bank, litigation heavyweights Quinn Emanuel Urquhart & Sullivan and Herbert Smith Freehills find themselves squaring up to each other today (1 December).
Decura, a financial services platform run up by three former Goldman Sachs bankers, is suing UBS after the Swiss financial giant shrunk its investment bank in a move that the claimants allege damaged a joint venture with Decura.
The claim was filed in July and the trial started at the UK commercial court before Mr Justice Burton today. Robert Hickmott and Sue Prevezer QC at Quinn Emanuel have been instructed by Decura, with Herbert Smith Freehills’ banking litigator Damien Byrne Hill defending the bank.
Decura was founded in 2012 by Goldman Sachs partner and member of the bank’s risk committee Vishal Gupta. The start-up established an exclusive outsourcing relationship with the Swiss bank to provide its clients with investment platforms.
Five months after the deal was signed, UBS launched Project Accelerate, which sped up a restructuring that saw the bank make almost 10,000 workers in the City redundant. Decura claims this ‘radical transformation’ had ‘a material adverse effect on UBS’s ability to market the exclusive business services’ and is seeking damages for the termination of the joint venture.
Decura also claims that to date, just £230,000 of revenue has been generated by the joint venture, with just five enquiries passed to Decura between June 2013 and February 2014. Decura had expected to generate around $200m in annual revenue once the business was up and running.
Decura stated in the particulars of claim: ‘Many of the products falling within the definition of Exclusive Business Services under the Agreement are no longer the focus of UBS IB (in particular structured and complex products on asset classes related to interest rates, credit, mortgages and commodities)…The number of relevant salespeople, in particular those who would formerly have been in a position to market exclusive business services, has substantially reduced.’
UBS, in its response on 10 November, said the claim was ‘deficient’ and ‘denies that Project Accelerate has affected its ability to perform its primary obligations under the agreement to market the exclusive business services’.
UBS added that Decura had acknowledged ‘there is no obligation’ on the Swiss-based bank to generate ‘a minimum amount of shareable revenue from sales of exclusive business services products to its clients’.
For more on disputes work evolving after the banking crisis, read a summary of our recent round table discussion in Banking Litigation Insight: ‘The worst case scenario is £200m – litigation is containable’