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Litigation watch – Claims against FTSE 100 companies up by 76% in 2013

A second spike in claims against banks stemming from the financial crisis is being blamed for a rocketing number of High Court cases involving FTSE 100 companies, which rose by 76% in 2013, the highest level since the credit crunch.

Data from Thomson Reuters Lawtel shows a total of 201 High Court cases involving FTSE 100 companies between June 2012 and June 2013, up from 114 cases the previous year. Of that total figure 55%, or 112 cases involved financial services companies, up from 65 cases in the previous year.

The UK’s top banks including the Royal Bank of Scotland (RBS), Barclays Bank and HSBC accounted for 47% of all litigation against FTSE 100 companies, partly due to well-documented failings such as the mis-selling of mortgage-backed securities and interest rate swaps or LIBOR manipulation.According to the data, financial services businesses were claimants in 45% of the 112 cases.

This spike in litigation against banks comes as the six-year limitation for claims arising out of the 2008 financial crisis and subseqent fall-out expires shortly.

RPC disputes partner Jonathan Cary told Legal Business: ‘The trend in claims against banks appears set to continue. In particular, we have recently seen a number of clients who have to come to us with concerns around limitation periods.’

Thomson Reuters head of in-house and ABS services, Ros Innes added: ‘There was a substantial increase in litigation against banks in particular at the outset of the financial crisis, and now we are seeing what looks like a second spike. Since claimants generally have up to six years in which to bring their case, it can take a while for disputes to reach the courts so there is every possibility that there are more cases involving financial services to come.’

Some recent examples of High Court cases involving the UK’s top banks include a $38m claim by Barclays Bank against Svizera Holdings in relation to monies allegedly owed to the bank by an Indian pharmaceuticals group under a loan contract, and Green and Rowley v RBS, where business partners Green and Rowley alleged they were mis-sold interest-rate swaps as a hedge against existing loan liabilities.