C&W defeats £1.5bn US class action

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The Independent Online

The chances of Cable & Wireless being successfully sued in the American courts receded further yesterday when more details of a March ruling in the US District Court emerged.

The chances of Cable & Wireless being successfully sued in the American courts receded further yesterday when more details of a March ruling in the US District Court emerged.

A class action brought by some shareholders against C&W was thrown out three months ago. However, the Eastern District of Virginia has given further reasons as to why the class action was dismissed.

In a memorandum of opinion it said the shareholders had failed to state a claim. Shareholders had argued that C&W had made misleading statements about its financial situation, particularly by failing to reveal a tax liability of up to £1.5bn related to the sale of the mobile phone group One2One to Deutsche Telekom in 1999.

Having dismissed the class action, the US court also upheld C&W's claim that Sir Ralph Robins, the former C&W chairman, could not be sued in the US because of a lack of jurisdiction.

The court did not accept C&W's argument that non-US shareholders should not be allowed to sue the company through the US courts. In other words, the US court maintained that it would have jurisdiction over a claim brought by non-US shareholders related to share purchases made outside the US in a non-US based company.

This latter point is seen by lawyers as a technical point of law with the US courts wanting to defend their right to hear cases. However, in relation to the specific C&W case, it had little or no bearing as the court had already decided to throw out the class action.

The opinion from the court was described as a "reassuring technicality" by a C&W spokeswoman. The company thinks it unlikely the shareholders will move to appeal the original action now they have heard the court's opinion.

C&W shares were up just 0.8 per cent at 128.5p.

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