In this article, Alex Forzani analyses the recent decision in Persons Identified in Schedule 1 v Standard Chartered plc [2025] EWHC 698 (Ch).
Introduction
In a judgment handed down on 25 March 2025, the High Court expressed doubts about the approach taken in Allianz Funds Multi-Strategy Trust v Barclays Bank plc [2024] EWHC 2710 (Ch) in relation to (a) the issue of reliance and (b) how liability can be established where an issuer delays publication of information (in each case under section 90A of the Financial Services and Markets Act 2000 (“FSMA 2000”)).
Whilst the decision in Persons Identified in Schedule 1 v Standard Chartered plc [2025] EWHC 698 (Ch) does not conclude that Barclays was wrong, it does provide strong support for a future challenge to the somewhat restrictive approach that the Court took in the earlier decision.
Facts
The underlying litigation concerns claims brought by shareholders of Standard Chartered (the “Claimants” and “SC” respectively). They allege significant losses were suffered as the result of untrue or misleading statements made by SC in information that it published to the market.[1]
Trial in the underlying action is listed for October 2026 but Michael Green J’s judgment considers an application brought by SC for strike out, alternatively reverse summary judgment, on two sets of claims brought by the Claimants.
- The first set of claims relate to the reliance which the Claimants claim to have placed on information published to the market by SC (which, on their case, informed their investment decisions (referred to as the “Common Reliance Claims”)). These claims are brought under section 90A and paragraph 3 of Schedule 10A of FSMA 2000 (“Paragraph 3”).
- The second set of claims relate to SC’s liability (as an issuer) where it had allegedly delayed the publication of information (known informally as ‘dishonest delay’ claims) (the “Delay Claims”). Such claims are brought under section 90A and paragraph 5 of Schedule 10A of FSMA 2000) (“Paragraph 5”).
Decision in Barclays
The focus of SC’s application was on the Court’s earlier decision in Barclays (handed down by Leech J in October 2024).
In Barclays, Leech J held that the requirement to prove reliance “meant that investors had to prove something more than that they suffered loss because of a false and misleading statement … the test that Parliament intended to apply was the common law test for inducement or reliance in the tort of deceit”.
Ultimately, the claimant would have to meet a high bar, namely that “they read or were aware of at least the gist (possibly through their agent) of the representation and understood it in the sense in which it was alleged to be false and that it caused them to act in a way which caused them loss” (paraphrased in Standard Chartered at 20; Barclays at 124 and 129).
As to dishonest delay, Leech J had held that the requirement in Paragraph 5 only “imposes liability on an issuer for dishonest delay if the issuer has actually later published the delayed information on a recognised information service”. Although the statute does not expressly provide for this, the Court was satisfied that this was its ordinary meaning and was borne out by external aids to construction (paraphrased in Standard Chartered at 94; Barclays at 138 – 144).
Argument
Common Reliance Claims
In broad terms, SC’s argument before Michael Green J was that the decision on these matters in Barclays was clear and that he was obliged to follow them as a matter of judicial comity (at 36). In addition, the defendant bank argued as follows:
- The wording of Paragraph 3 was plain because it referred to “reliance on published information” – this could not include reliance on other matters (such as an issuer’s share price or its status as a listed issuer which was subject to disclosure obligations to publish information to the market) (at 37).
- The purpose of Paragraph 3 was demonstrated by external aids to construction – in summary, in enacting the issuer liability regime, the UK Government had decided that each investor would have to demonstrate reliance on published information (at 38) rather than a US-style ‘fraud on the market’ approach (by which reliance, on the market taking that information into account when setting the price, would be permissible).
- Leaving Barclays to one side, the High Court’s in the Autonomy litigation had reached the same conclusion on the issue of reliance (at 39) (see ACL Netherlands BV v Lynch [2022] EWHC 1178 (Ch) at 129 and 130).
- The Court in Barclays had been correct to apply the test for reliance in the law of deceit rather than “a new, uncertain and unknown test that would be unique” to Paragraph 3 (at 40).
- Leech J’s view was consistent with the views expressed by leading textbook and journal authors (at 43).
- Leech J’s view had allegedly received support from the Court of Appeal in Wirral Council v Indivior plc [2025] EWCA Civ 40 (albeit in a slightly different context). In Wirral, Sir Julian Flaux C had stated that Barclays confirmed “the importance of the issue of reliance in these securities claims” (at 44 – 45).
The Claimants started from the premise that their case had been put differently before the Court to the way it had been in Barclays (at 26 and 72). In the present case, they had pleaded a ‘belief’ that the information published by SC was fair, full, true and accurate and that other market participates had relied on it in those terms. By contrast, in Barclays, the claimant group had pleaded that their investment processes had “proceeded on the basis” that the share price would reflect the contents of published information. This was more of a “passive assumption” than an active belief (at 72).
In addition, the Claimants argued that:
- Leech J’s approach in Barclays would not satisfactorily deal with cases concerning omissions. Parliament had not drawn a distinction in FSMA 2000 on questions of reliance between misstatement and omission cases. However, the common law test of reliance could not be applied to omissions cases as omissions are not actionable in the tort of deceit and, in any event, it would be “virtually impossible to establish that an investor was aware of and consciously considered that a matter had been omitted from published information” (at 48).
- Further, the common law test for reliance is not an area of law which has “hard and fast rules” such that it was not possible at a summary stage to “establish the parameters of the statutory liability regime [especially where it may be] based on the uncertain boundaries of the common law (at 62).
- None of the external aids to construction before the Court (or the Court in Barclays) had actually considered what ‘reliance’ meant under Paragraph 3 or at the common law (at 66).
- In any event, the Common Reliance Claims would satisfy the way that Leech J characterised “conduit sources or indirect reliance claims” where they were based on other market participants reading and considering the relevant published information (which would in turn, influence, the market and the claimant’s investment decisions) (at 68).
- The Claimants proposed that Paragraph 3 imported a “broad inducement test that could encompass the counterfactual of truth” approach – e. how the market price would have been affected if the published information had been true and complete and the influence that would have had on the claimant’s decisions to invest (at 76 and 78).
Delay Claims
In Barclays, the Court had analysed liability under Paragraph 5 in a narrow way such that it would have “no application to an issuer unless or until it has published the relevant information by recognised means or it has announced the availability of that information by recognised means” (at 102).
The Claimants took issue with this approach. They contended that this was not a correct interpretation of the text of the provision nor was it supported by external aids to construction. In particular, they cited the UK Government report and associated materials commissioned at the time of the regime’s implementation (known as the ‘Davies Report’) which stated in terms that it would not be “unattractive to impose liability where an issuer deliberately withholds information in order to mislead the market and to crate a false market in its securities” (at 106).
The Claimants also argued that the requirement to provide later corrective disclosure before a claim could be brought under Paragraph 5 would lead to perverse outcomes – issuers might decide not to publish information at all in order to avoid liability and, in circumstances where such disclosure was made some time after the original delay, it could be argued that the limitation period would only start running from the date of publication (rather than from the date of the dishonest delay) (at 113).
SC’s principal argument on Paragraph 5 was that if it was not interpreted as Leech J had suggested, there would be substantive overlap with omission claims under Paragraph 3. The absence of later corrective disclosure would made Paragraph 3 “redundant” in those circumstances (at 109).
Judgment
On the Common Reliance Claims, the Court held that, without the benefit of Barclays, it would have “refused to strike out the Common Reliance Claims or grant reserve summary judgment” on them as it was “clearly a developing area of law” in which there remain disputed legal questions which ought to be resolved at trial (at 79).
Further, Michael Green J stated that he had “doubts as to whether it is right to say that the common law test for reliance was intended by Parliament” under Paragraph 3 (at 85). In his view, a broader test for reliance may be required to deal with cases concerning omission. In addition, there was uncertainty in the law concerning reliance on implied representations such that it would be better if the matter were resolved at trial.
As to judicial comity, Michael Green J accepted that this was an important principle. However, it was difficult to apply it in the present case. He considered this to be a developing area of law in which there were factual matters that required determination and expert evidence (at 87). Whilst he was not convinced that Leech J was wrong on the question of reliance in Paragraph 3, given such uncertainty and taking into account case management factors which were not present in Barclays, the correct answer was to leave the matter to be determined at trial (at 88).
On the Delay Claims, the judge had “more doubts about whether Leech J was correct to conclude that dishonest delay claims are dependent on the issuer publishing corrective information at some stage” (at 117). He agreed with the Claimants that Leech J’s approach did not “fit with the objective of imposing liability in respect of a dishonest delay”. He also expressed uncertainty about whether the exercise of construction undertaken in Barclays had yielded the correct result (at 117).
Given that the point on Paragraph 5 “really was a novel point” of law, and again taking into account case management factors, the correct approach (as with the Common Reliance Claims) was to leave the matter to be determined at trial (at 119).
Comment
The doubts expressed by Michael Green J in Standard Chartered are most welcome.
The decision in Barclays posed challenges for claimants in securities litigation cases for precisely the reasons articulated by the judge. It imposed a high threshold for them to reach on the issue of reliance (which, in any event, is a highly fact-sensitive exercise). Further, the requirement to provide latter corrective disclosure in Paragraph 5 cases risks embellishing the text of the statute with a particularly onerous requirement.
However, the decision in Standard Chartered does not resolve these questions – it merely reserves them pending a full trial in this case (or other securities action claims). But the fact that the arguments canvassed by the Claimants received a positive reception is a helpful indication of how such matters might be dealt with by the Courts in due course.
Graham Chapman KC, Shail Patel KC and Will Harman appeared for the Claimants. Carola Binney and Alex Forzani acted for the claimant group at various stages in the Barclays proceedings.
Disclaimer: This article is not to be relied upon as legal advice. The circumstances of each case differ and legal advice specific to the individual case should always be sought.
© Alex Forzani March 2025
[1] The underlying allegations concern breaches of US sanctions and claims that SC was aware of a corruption scheme in an Indonesian company in which it had a minority interest.
