Does a bank owe a duty of care to give investment advice to sophisticated clients who purchase its complex investment products?

Abstract

In this article, the author analyses the important recent decision of Gloster J in the Commercial Court in London in JP Morgan Chase Bank v Springwell Navigation Corporation [2008] EWHC 1186 (Comm) 27 May 2008 and its impact for banks and financial institutions defending similar negligence and misselling claims relating to the sale of complex investments in the capital markets. She concludes that the decision will be welcomed by banks and other potential defendants to credit crunch litigation in the capital markets as a robust reminder that sophisticated parties in these markets are entitled to regulate their relationship by contract. The case is also a salutary reminder of the importance of the key element of reasonableness of reliance on the part of the claimant in attempting to establish a duty of care to give investment advice.