Clifford Chance

In a decision in Persons Identified in Schedule 1 v Standard Chartered PLC [2025] EWHC 698, the High Court rejected Standard Chartered's application to strike out claims based on price/market reliance and dishonest delay, declining to follow a recent decision in a similar shareholder action against Barclays plc on case management grounds.

Background

A number of shareholders have brought an action against Standard Chartered plc ("SC") under s.90A and Schedule 10A of the Financial Services and Markets Act 2000 ("FSMA") in respect of alleged untrue or misleading statements in and/or omissions from information published by SC between February 2007 and April 2019 in relation to breaches of Iran sanctions (the "Sanctions Breaches"). The Claimants also bring claims in respect of alleged dishonest delay in the publication of pertinent information regarding the Sanctions Breaches, and under s.90 and Schedule 10 FSMA in respect of alleged untrue or misleading statements in and/or omissions in certain prospectuses published between November 2008 and November 2015. The Claimants allege that they invested in SC on the basis of this misleading information and then suffered loss as a result. SC denies any liability under FSMA.

Barclays plc ("Barclays") recently faced a similar action under s.90A FSMA (Allianz Funds Multi-Strategy Trust v Barclays PLC [2024] EWHC 2710 (Ch), now settled), in which it brought a strike out application for claims rooted in: (1) price/market reliance (i.e. reliance on Barclays' share price) under paragraph 3 of Schedule 10A FSMA ("Paragraph 3") and; (2) dishonest delay under paragraph 5 of Schedule 10A ("Paragraph 5"). In that case, Mr Justice Leech found for Barclays in both instances on the basis that: (1) under Paragraph 3, reliance cannot be satisfied in respect of published information which the Claimants did not read or consider at all; and (2) under Paragraph 5, dishonest delay only imposes liability upon an issuer where publication of the information has subsequently taken place (the "Barclays Judgment"). For our full article on the Barclays Judgment, see here.

Following the Barclays Judgment, SC brought an application to strike out, and/or obtain reverse summary judgment in respect of, similar claims under Paragraph 3 and Paragraph 5 in the s.90A case against it.

Decision

Mr Justice Green rejected both the reliance and delay elements of SC's application. His decision was based on case management considerations – namely, that it was premature to strike out the claims at this preliminary stage – and, on that basis, he did not consider that he was bound to follow Mr Justice Leech's decision in the Barclays Judgment.

Price/market reliance claims

In deciding against striking out the price/market reliance claims, Mr Justice Green acknowledged that this is a developing area of law, in that there has been no decision on the meaning of "reliance" in Paragraph 3, and certain elements of the test of reliance in the common law are not fully established. He found that such disputed legal questions should be resolved on the basis of actual facts established at trial, and not on assumed or hypothetical facts.

Crucially, he also found that there were "points of distinction" between the Barclays case and SC case that were relevant when considering whether to dispose of the claims at a preliminary stage. These differences included that, through the Barclays Judgment, 60% of the value of that claim was removed. There had also not yet been any directions in relation to the price/market reliance claims and so little, if any, time or money had been spent on them. In contrast, in the SC case, a strike out of the price/market reliance claims would not dispose of the case or substantially reduce the burden of the trial itself. In addition, the parties had already spent time and costs in preparing these claims for trial.

A further point of distinction was that, in the Barclays Judgment, Mr Justice Leech considered that disposing of such a large proportion of the claim ought to promote an early settlement and that this was a compelling reason why the price/market reliance claims should not be permitted to go to trial. In contrast, Mr Justice Green determined that settlement would not be more likely to happen in the SC case because, if the delay claims were allowed to continue, the full value of the claim would continue to be pursued. In any case, Mr Justice Green stated that the possibility of settlement could not be taken into account in his decision.

Although "not convinced" that Mr Justice Leech was wrong in his conclusions on the legal points as to the meaning of "reliance" in Paragraph 3, in addition to the points of difference between the cases, the principal reason Mr Justice Green did not consider that it would be right to strike out the price/market reliance claims at this stage was that "there are complications with the application of a consistent test for reliance to both misstatements and omissions and there remain doubts as to the parameters of the common law test".

Further, Mr Justice Green considered that "there are factual matters that…require determination" and that "the expert evidence might assist in understanding the extent to which the Published Information would have affected the market price and its influence therefore on the decisions made by the Claimants". Mr Justice Green determined that the Claimants should have the opportunity of putting the price/market reliance claims forward at trial and for a decision in relation to them to be based on all the evidence, both factual and expert. Mr Justice Green did, however, note that this "may be an uphill struggle for the Claimants".

Dishonest delay claims

In deciding against striking out the dishonest delay claims, Mr Justice Green drew on much of the same reasoning as for the price/market reliance claims. However, he stated that he had "more doubts" about whether Mr Justice Leech was correct to conclude that dishonest delay claims are dependent on the issuer publishing corrective information at some stage. He did not consider that such a requirement necessarily fits with the objective of imposing liability in respect of a dishonest delay and doubted whether it serves any useful purpose. He was also unsure that he agreed with the construction of Paragraph 5 together with Paragraph 2(1) of Schedule 10A FSMA (which covers published information), and did not think the interpretation of Mr Justice Leech prevents there being overlap with Paragraph 3.

Mr Justice Green considered that it is better to decide this "novel point of law" on the basis of the actual facts at trial, rather than on assumed or hypothetical facts. He also noted that the delay claims covered by certain of the published information in question would have to continue anyway, even if the Barclays Judgment is correct. He therefore found there was no good case management reason for removing other delay claims from the trial.

Overall, therefore, Mr Justice Green decided, as a matter of case management, as well as in the light of his "uncertainty as to the correct answer to the legal question", to leave the price/market reliance and dishonest delay claims to be determined at trial.

Discussion

Those hoping for clarity as to the correct approach to issues of reliance and dishonest delay in s.90A claims may be disappointed by this decision. Significant uncertainty remains not only as to the relevant legal tests but also the case management of these claims.

Defendants will look to align their position with Barclays, rather than SC, but the complexity of these claims and the Court's inherent discretion to resolve case management issues serve to increase unpredictability, particularly at the interlocutory stage.

On the claimant side, passive investors looking to bring securities claims (and their litigation funders) may be encouraged by Mr Justice Green's decision to allow these claims to proceed to trial, but the difficulties remain in proving such claims to the necessary standard at trial.

It remains to be seen whether SC will elect to appeal the decision. In the meantime, similar applications in other cases may provide further clarity.

Clifford Chance has represented and is representing defendants in previous and ongoing s.90 and s.90A FSMA cases.