UT (Tax & Chancery) UT-2022-0000150 - [2024] UKUT 00254 (TCC)

In October 2008, Barclays carried out a second capital raising exercise in which the Qataris also participated. Barclays also paid a further sum to a Qatar entity which was said to be under an extension to the ASA (“ASA 2”). No similar sum was paid to other investors, including special purpose vehicles (“SPVs”) owned by PCP Capital Partners LLP and PCP International Finance Ltd (together, “PCP”).

PCP subsequently lost control of the SPVs but later negotiated a fee relating to the work it had carried out in relation to the second capital raising exercise. In January 2016, PCP sued Barclays on the basis that:

The case was heard between July and October 2020, and judgment was handed down on 26 February 2021. Waksman J held at [363] that the ASA was not “a fully detailed service agreement, with ordinary commercial terms for payment” but instead “a virtually worthless piece of paper, save for the payment of the £42m”. He added that “Qatar barely had to do anything to perform it and while Barclays had the obligation to pay, it did not have much if anything by way of entitlement under the agreement anyway”. We agree with and adopt those factual findings.

Waksman J went on to find that the ASA was not a sham, which he described at [368] as a “highly specific and narrow doctrine”, saying at [366]:

“The agreement, as executed, may well be regarded as uncommon or artificial or even perhaps reflective of a breach of fiduciary duty on the part of those who were involved in its production on Barclays’ side including, perhaps, Mr Varley who signed it. It might be regarded as a transaction at an undervalue. On any view the whole process looked ‘smelly’ or ‘dodgy’. But none of that meant that the parties each intended not to be bound by what they signed.”