SECURE CAPITAL SA V CREDIT SUISSE AG

[2017] EWCA Civ 1486, Court of Appeal (Civil Division), Lord Justice Beatson, Lord Justice David Richards and Lord Justice Irwin, 6 October 2017

Conflicts of law - Choice of law - Contract - Right to action under bearer notes held under Clearstream system - Party entitled to action under Luxembourg law - Notes governed by English law - Characterisation

Credit Suisse applied for summary judgment or to strike out the claim made by Secure Capital. The claim related to eight longevity contingent notes issued by Credit Suisse in 2008 and purchased by Secure Capital. These notes were in bearer form and governed by English law, and the bearer was the Bank of New York Mellon. It was holding them on behalf of the electronic clearing system Clearstream, which operated under Luxembourg law. The notes were linked to life insurance policies which meant that the prospect of the holder of the notes receiving any redemption payment for the notes depended on mortality rates among a set of "reference lives" to which the relevant life insurance policies related. The mechanism of calculation was soon to be amended which would make the policies worthless, which Credit Suisse allegedly knew. The notes contained a term that Credit Suisse had taken all reasonable care not to make misleading statements. Secure Capital claimed damages for breach of that term, based on a Luxembourg law under which Secure Capital maintained that it was entitled to exercise the rights linked to the possession of the notes, including the right of the bearer to bring an action for a breach of a term of the notes. Hamblen J at first instance ([2015] 1 Lloyd's Rep 556) concluded that Secure Capital's claim had no real prospect of succeeding and granted Credit Suisse's application. Secure Capital appealed.