A lesson on statutes of limitations: HSBC defeats accusation of manipulation of the ECU foreign exchange market

The recent ruling in the dispute between ECU and HSBC highlights the importance of limitation periods and causation law in foreign exchange (forex) claims. Clive Zietman, Natalie Osafo, Mahdi Ebrahimi and Pav Theodoulou are reviewing the decision.

In the case of ECU Group Plc v HSBC Bank UK Plc [2021], the Commercial Court ruled that the proceedings brought by The ECU Group plc (“ECU”) against HSBC et al. (“HSBC”) alleging manipulation of the foreign exchange markets between 2004 and 2006 are time-barred. In addition, the court ruled that HSBC’s shares caused no direct loss to the ecu, as ordinary market movements would have triggered stop-loss orders anyway (see explanation below).


In a widely publicized and widely publicized lawsuit, HSBC was charged with “blatant and indefensible” forex fraud by ECU, a foreign currency debt management firm and former client of the bank. ECU has provided loans to its clients from several banks, the most important of which was HSBC Private Bank (UK) Limited (“HPBP”). HSBC has been accused of misusing confidential information belonging to ECU between 2004 and 2006 and of profiting from 52 transactions during this period.

According to the agreements with its clients, ECU monitored the loans (on multi-currency platforms) and switched them between different currencies to maximize their value. Periodically, the ECU asked the banks to transfer the currency in which the loans were issued.

ECU has filed several claims against HSBC relating to loans known as “market” and “stop-loss” orders. A “market order” requires an immediate change in currency, while a “stop-loss” is a conditional change triggered when the prevailing spot exchange rate reaches or exceeds a specified trigger level. ECU introduced these claims in its own name and in its capacity as assignee with certain borrowing clients.

There were four types of complaints:

  1. Upstream trading claims that HSBC has “traded ahead” on a number of trades, going against ECU instructions that it should not be done. (“Trading ahead” is where a market maker – HSBC in this case – enters exclusive orders before or with client orders that are executed at the same or better price before the client order.)
  2. High profile claims based on allegation that HSBC traded on knowledge of ecu trigger rate resulting in increased profits for HSBC.
  3. Margin claims based on the allegation that HSBC took advantage of the addition of margin to the exchange rate, which it was not entitled to do.
  4. Trading on behalf of third parties or “trust” claims based on the allegation that certain HSBC merchants traded for their own account with knowledge obtained from ECU.

Limitation issues

The normal time limit for bringing an action based on a simple contract is six years and, in the case of an act, twelve years, from the date of the alleged breach of the contract or act. The purpose of the limitation is to require that claims be brought to court within a time frame where the evidence necessary for their fair judgment is likely to remain available and reliable.

Under section 32 of the Limitation Act 1980, the start date may be different where the claim is based on fraud or the defendant willfully withhold facts relevant to the plaintiff’s right of action. In such cases, the first day becomes the day the plaintiff discovered the deception or could do so with due diligence. The Limitation Act seeks to strike a balance between protecting defendants against expired claims and allowing plaintiffs to overcome the expiration of the ordinary time limit when the law so provides.

His Honor Judge Waksman QC, who reviewed ECU’s request for pre-action disclosure, said ECU was unaware and could not reasonably have known that it had taken the lead before the actions earlier reports that led to a worldwide scandal and criminal convictions and civil lawsuits against the bank’s forex traders. The judge ruled that HSBC’s rejection of any upstream claim in 2006 was a deliberate cover-up of a material fact and allowed the case to proceed on that basis.

Arguments of the ECU and HSBC

ECU argued that HSBC deliberately committed breaches of its obligations which were unlikely to be discovered for some time and that the facts relating to the claim were deliberately withheld. ECU also claimed that HMRC’s fraudulent misrepresentation and / or conspiracy should be considered as part of the limitation. The plaintiff’s position was that a letter sent by HSBC containing a long and detailed rebuttal to any preferred suggestion represents the “willful concealment” that the Limitation Act requires in order for the limitation period to be extended.

HSBC lawyers have argued that while the willful cover-up was the alleged leader, its discovery by ECU in 2006 means that no facts were covered up. In contrast, ECU’s case was that the relevant facts were not discovered by ECU until February 4, 2013. HSBC argued that as of May 4, 2006, when ECU filed a first complaint, ECU was in a position to plead his entire claim. ECU relied on Section 32 of the Limitation Act to extend limitation periods, alleging deliberate concealment of facts.

In assessing the arguments, Madam Justice Moulder considered the testimony of Mr. Petley, CEO of ECU, in particular his knowledge and beliefs regarding the HSBC investigations and the data available to him in 2006. Mr. Petley a argues that circumstantial market data would not amount to evidence of dishonest premeditation on the part of HSBC sufficient to permit a claim. He also said he could not be certain of HSBC’s conduct since conditions were consistent with what might be considered “typical” market movements.

Oral evidence and observations

During cross-examination, Justice Moulder criticized the applicant’s testimony in his attempts to discredit witnesses, even expert witnesses. The judge cited Gestmin SGPS v. Swiss credit [2013] as a precedent that witnesses are generally not able to correctly remember conversations and events if they took place a long time ago. Madam Justice Moulder turned to tapes of conversations and e-mail exchanges in her judgment.

With a few exceptions, the court treated the evidence submitted by the claimant with caution as most of those involved remain employed by ECU and therefore had reason to support the case. Those who were not ECU employees turned out to have extensive market and industry knowledge due to their multi-year experience in the sector, and therefore did not convince the judge that they did not have information on the market at the material time.

Madam Justice Moulder found that ECU’s expert report tended to favor the business rather than provide a balanced view to the tribunal. In contrast, the HSBC expert had a good understanding of the case. During the four days of his cross-examination, he provided good reasons why his account should be accepted when the two experts disagreed on an issue.


For all four types of claims filed, the court’s decision was based on the information available to the claimants at the time. With respect to the anticipated trade receivables and the prepaid receivables, Justice Moulder found that ECU had sufficient knowledge to initiate the receivable in 2006, concluding that the receivables were therefore time-barred. The court also concluded that claims based on false statements should be statute-barred.

Madam Justice Moulder has ordered costs in favor of HSBC, and ECU owes the defendant more than $ 11.6 million in legal fees. ECU has confirmed that it will not appeal the decision.

This decision demonstrates that the possibility that a delay will be fatal to the success of the request cannot be underestimated. As soon as there are signs that a dispute or even a potential dispute could end up in court, companies should seek advice on limitation periods and investigate their claims as soon as possible.