LM-2024-000238 - [2025] EWHC 1441 (Comm)

Since the parties have been doing business together, Jefferies’ Terms of Business have gone through several iterations: 2014; 2016; January 2018; July 2018; November 2019; July 2021. Most of the relevant provisions were materially identical in all the iterations, including in the final two iterations, though in some instances the numbering was different. I shall set out the text in the July 2021 Terms of Business, noting as appropriate where the earlier texts had material differences.

Clause 1.1 provides that the Terms of Business “apply to all Services (as defined in clause 4) we may carry on with or for you from time to time.” Clause 4.1 defines “Services” to include “dealing, settlement, clearing and custody services … in respect of all investments … including executing orders on your behalf, receiving and transmitting orders …” There is no dispute that Jefferies’ entry into the Trade was within the definition of Services.

Clause 1.3 provides in part:

“1.3.

In these Terms, ‘we’, ‘us’, ‘our’ and ‘Jefferies’ means Jefferies International Limited and its respective branches, officers, employees and directors, and ‘you’ and ‘your’ means you and/or (as relevant) your Principal(s). … ‘Principal’ means any person or entity on behalf of which you are to enter as agent into transactions with us …”

(In the 2014 iteration, the corresponding clause 1.2 did not define “Principal”. But clause 5.1 began: “Where you are an agent or otherwise acting on behalf of or for the benefit of any other person (‘the Principal’) …”)

Clause 1.4 provides: “These Terms are legally binding and shall take effect after receipt by you of the same and/or upon you beginning or continuing to undertake business with us.”

Clause 23.6 provides for changes to the Terms of Business:

“23.6

We may make changes to our Terms, policies and other documentation referred to in these Terms from time to time. We will notify you of any changes to our Terms, Order Execution Policy and execution arrangements, Conflicts Policy, Complaints Policy, Costs and Charges Information Document and any policy or document or Schedule referred to in these Terms by posting updated versions of the applicable documents on www.jefferies.com and, where there is a material change, by giving you written notice. Any such change will become effective when the updated document is posted on our website or, in respect of material changes, on a date to be specified in the notice which will be at least ten (10) Business Days after the notice is sent to you unless (i) it is impractical to do so or (ii) otherwise required by Applicable Law.”

From the January 2018 iteration onwards, clause 26.1 provides:

“26.1.

All correspondence, notices, certificates and statements of account (‘Notices’) may be provided to you by whatever means unless otherwise required by Applicable Law. Any Notices from us to you shall be sent to the last mailing address, facsimile number or email address held for you on our records (as applicable). You confirm that you have regular access to the internet and consent to information including, without limitation; information about amendments to our Terms and other documents referred to in these Terms (including the Order Execution Policy, Costs and Charges Information Document, Conflicts Policy and Complaints Policy), information about the nature and risks of investments and other information concerning the Services provided to you which we will post on our website at www.jefferies.com or such other website as we may from time to time notify to you.”

The exclusive jurisdiction provision, on which Jefferies relied when effecting service out of the jurisdiction, is clause 29.1:

“29.1

You and we agree that these Terms (and any non-contractual obligations, disputes or claims arising out of or in connection with them) shall be governed by and construed in accordance with the laws of England and the parties irrevocably submit to the exclusive jurisdiction of the English courts.”

Clause 5, headed “Acting as Intermediary” (Footnote: ¹), deals with the position where the counterparty is acting for a third party.

“5.1

Where you are an agent or otherwise acting on behalf of or for the benefit of a Principal, then, even if you disclose that fact and/or the identity of that Principal to us, we will (save to the extent provided in this clause below) treat you alone as our client for all purposes relating to these Terms, and (subject to Applicable Law) we shall not owe any regulatory obligations to the Principal.

5.2

You, as agent for your Principal and on your own behalf, retain full responsibility for making all investment decisions with respect to any Principal.

5.3

You undertake and warrant where you enter into and execute a transaction pursuant to these Terms in your capacity as agent for, or on behalf of, a Principal, that:

5.3.1

you are expressly authorised by, or otherwise acting within the scope of the authority you have received from the Principal to enter into that transaction for, or on behalf of, the Principal;

5.3.2

the Principal has full power, authority and legal capacity to (a) enter into the transaction (b) perform all obligations contemplated by these Terms and (c) make the representations and warranties set out in clause 16;

5.3.3

when performing the transactions and activities contemplated by these Terms, you will procure that the Principal complies with all Applicable Law;

5.3.4

any information you provide or have provided to us in respect of your or the Principal’s financial position, domicile or other matter is accurate and not misleading;

5.3.5

in entering into any transaction for, or on behalf of, a Principal, you have no reason to believe that the Principal will not be able to perform any settlement obligations thereunder;

5.3.6

you will procure the performance by the Principal of all obligations and liabilities arising under or by virtue of these Terms; and

5.3.7

you are now and will be at all times in the future in compliance with Applicable Laws concerning the detection of financial crime, prevention of terrorism and anti-money laundering, and, in particular, you (a) have carried out customer due diligence on the Principal in accordance with Applicable Law; (b) consent to our reliance on such customer due diligence for the purposes of regulation 39 of the Money Laundering Regulations 2017; and (c) will retain any records resulting from such customer due diligence for a period of at least 5 years from the date of any relevant transactions or the end of your business relationship with the Principal (as applicable) and, where required in order to satisfy our regulatory obligations, you will make available to us (immediately) any records regarding the Principal (and any beneficial owner) which you obtained when carrying out customer due diligence and any other information as we may require.

5.4

Where you have notified us of the identity of the Principal to which an instruction relates, the contractual rights and obligations arising under these Terms (other than under this clause 5) in relation to any transaction entered into pursuant to such an instruction shall be rights and obligations between us and the Principal alone. If you do not provide us with actual notice of the Principal account to which an instruction relates, we reserve the right to hold you liable to us as Principal in relation to any transaction entered into pursuant to such instruction.

5.5

You undertake, as agent for each Principal and on your own behalf, to notify us immediately if any two or more Principal accounts relate to the same Principal, in which case we shall administer such accounts as belonging to the same Principal. We shall, subject to these Terms, administer Principal accounts which we reasonably believe relate to two different Principal’s separately.

5.6

We shall in respect of each Principal be entitled to set off any amount at any time owing from the relevant Principal account on any account referable to that Principal against any amount owing by us to that Principal or standing to the credit of the relevant Principal on any account which is referable to that Principal and any security, guarantee or indemnity given to us by or in respect of the relevant Principal for any purpose shall extend to any amount owing from that Principal after the exercise of such right.

5.7

Where we exercise any right of set-off, security or lien against a Principal of yours, we will only do so in respect of liabilities due to us by that Principal. We will not use the assets of your Principal in any way whatsoever to meet the liabilities due to us from a different Principal of yours.

5.8

If in relation to any Principal of yours an event of default occurs under clause 17, you undertake to:

5.8.1

promptly disclose the address and identity of such Principal; and

5.8.2

take all reasonable steps to assist us in rectifying such failure including instituting legal proceedings against any underlying Principal of yours.”

Clause 17 provides in relevant part:

“17.1

An ‘Event of Default’ shall occur where:

17.1.1

(i) you fail to make any payment due to us or to deliver any securities due to us (or agents used by us); or (ii) you fail to perform any other obligation owed to us; or (iii) any representation or warranty you make to us is false or misleading either under these Terms or under any other agreement between you and us; or (iv) we for any reason whatsoever reasonably deem it necessary or desirable for our protection;

17.1.2.

you become unable to pay your debts as they fall due or become insolvent or bankrupt or become the subject of any insolvency, bankruptcy or administration proceedings under any Applicable Law; or

17.1.3.

a winding-up resolution is passed or a winding-up or administration order is made in respect of you or a similar petition is filed by or against you or if notice is given of a general meeting of your creditors or any similar event or a receiver, liquidator, administrator or similar official is appointed in respect of you or any of your property under any applicable rules.”