QUEEN'S BENCH DIVISION
COMMERCIAL COURT
B e f o r e :
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TOBIAS GRUBER & OTHERS | Claimants | |
-and- | ||
(1) AIG MANAGEMENT FRANCE SA | ||
(2) AIG FINANCIAL PRODUCTS CORP | ||
(3) AIG CAPITAL MANAGEMENT LIMITED (Claim discontinued | ||
against this Defendant) | ||
(4) AIG TRADING GROUP INC | ||
(5) AIG ASSET MANAGEMENT (EUROPE) LIMITED | ||
(6) AIG MARKETS INC | ||
(7) AMERICAN INTERNATIONAL GROUP INC | Defendants |
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MR A HUNTER QC (instructed by Paul Hastings (Europe) LLP) appeared on behalf of the Defendants.
Hearing Date: 14 October 2015
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Crown Copyright ©
HHJ WAKSMAN QC:
Introduction.
The essential claim
These proceedings
(1) an application by D4 and D6 seeking to set aside service upon them out of the jurisdiction, on the essential ground that there is no serious issue to be tried as between them and the claimants.
(2) an application by D5 for summary judgment under Part 24 so as to dismiss the claim against it on the ground that the claimants have no reasonable prospect of success, nor is there any other compelling reason for a trial.
(3) an application by the claimants to add a further four claimants with similar claims.
The claims against D5 and D6
The DCP and SIP provisions
"AIG Financial Products Corp (including, where applicable, all subsidiaries thereof, and AIG Trading Group Inc [which is D4] (including where applicable all subsidiaries thereof, "AIGTG") (together, "AIGFP")) establishes in this document the AIGFP deferred compensation plan."
"The benefits payable hereunder shall constitute an unsecured debt of AIG Financial Products Corp to the participants and their beneficiaries and to AIG and shall not have the benefit of any guarantee by AIG."
Later on:
"The payments of benefits payable hereunder shall be made only from the general funds of AIG Financial Products Corp."
"The outstanding balance credited to the deferred compensation accounts shall be subject to reduction from time to time to the extent of any losses incurred (i) by AIGFP excluding AIGTG or (ii) by AIGGT resulting from transactions entered into after January 1, 2003."
"AIG Financial Products Corp shall be obligated subsequently to restore accounts so deducted plus accrued interest thereon at the interest rate determined in accordance with section 3.03 and in connection thereof the board shall adopt a plan setting forth a schedule under which AIG Financial Products Corp shall restore amounts deducted from the participants in AIG's accounts balances. Any such restoration plan shall provide that any restored amount shall be paid in 2013."
"For the avoidance of doubt if AIG Financial Products Corp consolidates or amalgamates with or merges with or into or transfers all or substantially all of its assets to another entity, then the resulting surviving or transferee entity shall assume all of the obligations of AIG Financial Products Corp hereunder."
The nature of and reason for the alternative case
Real Prospect of success of the claims against D5 and D6
"D6 serves as a derivatives intermediary between the AIG group and third parties to provide hedging services. The derivatives portfolio of D6 consists primarily of interest rate and currency derivatives [which of course will indicate the hedging function] and also included certain legacy credit derivatives that had been novated from D2."
The position of D4.
"AIG Financial Products Corp including, where applicable, all subsidiaries thereof, and AIG Trading Group (including where applicable all subsidiaries thereof) ..."
"The balance in your account is an unsecured subordinated liability of AIG Financial Products Corp to you and your beneficiaries ..."
All these references using the full name of D2.
Joinder
(1) insofar as the new claimants' claims are directed to D4, D5, and D6, permission to join them should be refused since there is no real prospect of a successful claim against those defendants for the reasons articulated in those defendants' own applications. That contention is well founded in the light of my findings above and I say no more about it;
(2) secondly however, and in relation to all claims, AIG contends that by the time of the making of the application, the relevant limitation period had expired. I now turn to that matter.
"The court may add or substitute a party only if the relevant limitation period was current when the proceedings were started and the addition or substitution is necessary."
"The addition or substitution of a party is necessary only if the party is satisfied that (a) the new party is to be substituted for a party [that is not this case] or (b) the claim cannot properly be carried on by or against the original party unless the new party is added or the original party has died."
"The court may allow an amendment whose effect will to be add or substitute a new claim but only if the new claim arises out of the same or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings."
"The burden is on the claimant to show that the defendant does not have a reasonably arguable case on limitation. If the defendant has a reasonably arguable case that the claim is statute barred, the appropriate course is to require that claim to be raised in fresh proceedings in which the limitation point can be tried."
"The purported losses were not trading losses in that financial year, they were historic losses, so they could not be permissibly applied to the relevant individual's account balances."
"Accordingly I expect the accounts of AIG and AIGFP participants in the plans to have substantial negative balances at the end of the current compensation year. Further, any future deferrals under the terms will be affected by the substantial negative balances."
"On 4 November a representative of AIG sent the claimant a document saying there was no limit on the extent of such reductions. The cases are so large negative balance results. Future deferrals must first offset the negative balances before DCP and SIP accounts will carry any positive balance."
"It summarises the balance in your account as at January 1, 2009, after the allocation of losses for the 2008 compensation year. Your account balance was reduced to reflect losses incurred for the year ended 30 November 2008. The negative balances do not create any obligation on your part to pay any amount but D2 does not expect to make any further interest or instalment payments as long as the accounts carry negative balances."
"Enclosed herewith are statements of your account balances in the 2007 special incentive plan and the DCP as of January 1, 2009."
"The defendant wrongfully applied or failed to remedy the application of an accounting treatment which reduced the entitlements of the claimants from the calendar year 2008 onwards and in any event wrongly reduced or failed to remedy the reduction of the account balances not merely to zero but to negative balances."
"If the potential claims were joined, it should be on the basis there is no relation back, as to do otherwise would be to risk unfair prejudice to the defendants' accrued limitation defences."