Barclays has won the first battle in a bitter legal tussle over its alleged Libor interest rate rigging scandal, reports accountancy services Harris & Co.
It was given the go-ahead to appeal a claim from Guardian Care Homes that it was mis-sold interest rate hedging products - or swaps - after manipulating the Libor interest rate.
In June 2012, Barclays agreed to pay £270m in fines to US and UK authorities after admitting it had manipulated Libor and other key interest rates.
The case is set to be a landmark test case for thousands of small businesses who believe they were mis-sold such swaps.
Gary Hartland, chief executive of Wolverhampton-based Guardian Care Homes said:
‘This is a hugely opportunistic appeal by Barclays. That Barclays lodged it five months after the original decision by the High Court for Barclays to face a claim of fraudulent mis-representation, and prompted by a case with a fundamentally different set of circumstances, hints at a last throw of the dice by a business desperate to avoid facing rightful justice.’
‘Barclays has admitted aggressively selling these highly complex financial products, which were designed to protect someone against an interest rate raise, and it is absolutely right that they should face allegations on the grounds that they were manipulating that rate for its own benefit. We are grateful for the decision today to move the date of our trial to next year which gives us time to defeat this lightweight appeal.’
Case judge, Justice Flaux, had previously ruled that Guardian Care Homes could include claims relating to Libor manipulation in the case, but this was then successfully appealed by Barclays.
On Monday Justice Flaux ordered that the start of the trial should be moved to 29 April 2014.
A Barclays spokesman said:
‘This business had a suite of advisors and a lot of financial experience and skill in-house. Barclays understands the client entered into their swap agreements with sufficient understanding to exercise their own judgment as to whether the products would meet their business objectives. This is a significant business which owes Barclays £70m.’
The Financial Services Authority estimates that since 2001, some 44,000 interest rate swaps were wrongly sold to UK companies since 2001. The swaps were designed to offer companies protection against rates rising by making their future repayments more predictable, but many borrowers had no idea they would pay much more if lending rates dropped and they would face big fees to extricate themselves from the arrangements.