Commercial Court judgment in the ‘Tuna Bonds’ case

On 29 July 2024, Mr Justice Robin Knowles handed down judgment in The Republic of Mozambique v Credit Suisse International & Ors [2024] EWHC 1957 (Comm) following a three-month trial in October-December 2023. The litigation became known as the “Tuna Bonds” litigation and was named as one of The Lawyer’s Top 20 Cases for 2023.

The litigation concerned three infrastructure projects in Mozambique financed by more than $2 billion provided by Credit Suisse and VTB Capital PLC. The debt was backed by sovereign guarantees given by the Republic of Mozambique. In 2016, the lending was revealed and caused significant damage to the Republic’s economy. The projects did not succeed, and the resulting investigations revealed evidence that various individuals had received large payments and that these payments were bribes. Several former members of the Republic’s government were criminally prosecuted in Mozambique and the United States, and Credit Suisse accepted substantial penalties of over $400 million following regulatory action taken against them for failing to protect against corruption and fraud.

In the Commercial Court proceedings, the Republic challenged the validity of the sovereign guarantees on the basis that they had been procured by bribes. The Republic sought extensive damages from the Privinvest Group (the provider of the services under the projects and the party responsible for paying the bribes), as well as from Credit Suisse. In consolidated proceedings, VTB Capital PLC brought a claim against the Republic for repayment of loans advanced by it to finance two of the three projects. The Republic sought to defend that claim on the basis of immunity under the State Immunity Act 1978.

As a result of various settlements reached prior to the handing down of the judgment, the judgment only had to determine the claim brought by the Republic against the Privinvest Group. The Court found for the Republic, holding that payments were made to the Former Finance Minister Manuel Chang and that those payments constituted bribes under English Law. The Court found that the Republic was entitled to payment of $825 million and to an indemnity in respect of future liabilities estimated to be $1.5 billion from the Privinvest Group.

The Republic of Mozambique v Credit Suisse International & Ors [2024] EWHC 1957 (Comm) judgment

Robert Winspear (led by David Davies KC of Essex Court Chambers) appeared for Ms Isaltina Lucas, the former Director of Treasury and Deputy Finance Minister of Mozambique.

Ms Lucas had always denied any wrongdoing. The Republic brought no claim against her, and she was not prosecuted or convicted of any crime. Ms Lucas was involved in the litigation because she was subject to additional claims brought against her by the Privinvest Group and Credit Suisse. Both of those parties relied upon a factual allegation made by the Republic that Ms Lucas was in receipt of bribe payments. Those parties argued that if that factual allegation was proven, Ms Lucas would be liable to pay a contribution and/or to give an indemnity in respect of any damages that those parties were ordered to pay to the Republic.

Following a settlement between Credit Suisse and the Republic in October, Credit Suisse’s claim against Ms Lucas was stayed by agreement. Ms Lucas then secured an agreement with the Republic that they would no longer pursue the factual allegation in its case that she had been in receipt of bribes. As the Privinvest Group’s primary case was that no bribes had been paid, there was no longer any positive factual allegation within the proceedings that the Privinvest Group could rely upon to maintain their alternative contribution claim against Ms Lucas. Ms Lucas applied to strike out that remaining contribution claim on that basis, and Mr Justice Robin Knowles acceded to her application in December 2023, finding that the Privinvest Group’s claim had no reasonable prospect of success.  The result was that all claims against Ms Lucas were resolved without any finding of liability against her prior to the conclusion of the trial.

Robert Winspear of 42BR Barristers (led by David Davies KC, of Essex Court Chambers) and acting alongside Duncan Bagshaw (Howard Kennedy partner and barrister) was instructed by Duncan Bagshaw and Luke Barden de la Croix at Howard Kennedy.

31st Jul 2024

Robert Winspear

Call 2019