Bank of England begins pursuit of £81m from BCCI creditors

Click to follow
The Independent Online

The Bank of England will tomorrow go to court to present a demand for £81m from the creditors of the Bank of Credit and Commerce International following a controversial 12-year legal battle between the two.

A case against the Bank of England was launched in 1993 but it collapsed last November. The Bank is now seeking the amount it spent defending the action over the whole period - £73m - as well as interest of around £8m.

The hearing will take place before Mr Justice Tomlinson, who presided over the trial. The Bank is hopeful he will refer the claim to specialist judges, known as cost judges, who assess how much parties should pay when it comes to legal costs. Both sides will be able to make submissions during the process about how much they think is fair.

Although the Bank's barrister, Nicholas Stadlen QC, will be in court tomorrow, it is understood that Gordon Pollock QC, who represented the BCCI creditors, will not be present.

BCCI's liquidator, Deloitte, claimed senior officials at the Bank had acted in bad faith in their supervision of BCCI, which went bust in 1991 with debts of £9bn. An unusual "misfeasance" claim was launched as the Bank cannot be sued for negligence.

After years of legal wrangling, the case finally came to trial in 2003, but still no one appeared in a hurry to conclude it. Mr Pollock's opening remarks lasted 80 days, a record which was then smashed by Mr Stadlen, who racked up 120 days.

But then Mr Pollock stunned commentators when he announced that, following a meeting with the creditors, they would no longer be pursuing the claim. Mr Tomlinson dismissed the action, though not before Mr Stadlen had launched a lengthy tirade in court about the "costly and wasteful" case.

Mr Tomlinson, meanwhile, said it had been "a matter of surprise to me for about a year now that the action was being pursued".

The Bank's claim for costs could also hit Deloitte and City law firm Lovells. The Bank is seeking recompense from the BCCI creditors, but they could then seek to recover this from Deloitte and Lovells, which, as advisers, led the action. The Bank was advised by rival City firm Freshfields Bruckhaus Deringer.

However, insiders are believed to be hopeful that the creditors will not pursue this course of action. They also say a legal fund was established to pay any costs, although had the case been successful, it could have been returned to the creditors.