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ARTICLE · 01 OCTOBER 2018

SIDRU Judgment: Hedging Transaction Not Rendered Speculative Even If It Exposes Party To Unlimited Risk

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In the wake of the Saint-Leu-la-Forêt decision of May 28, 2018, France's Court of Cassation issued an important decision on structured swaps concerning legal actions brought by public authorities against banks...

FranceFinance and Banking
Frédéric Gros
Frédéric Gros
Jayant W. Tambe
Jayant W. Tambe
Philippe Delelis
Philippe Delelis
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In Short

The Context: In the wake of the Saint-Leu-la-Forêt decision of May 28, 2018, France's Court of Cassation issued an important decision on structured swaps concerning legal actions brought by public authorities against banks that had marketed these products.

The Outcome: The Court fully rejected the claims of Saint-Germain-en-Laye SIDRU (Syndicat Intercommunal de Destruction des Résidus Urbains) against Depfa Bank plc.

The Impact: The Court's September 5, 2018, judgment has many lessons on the concept of inherent risk derivatives transactions and the concept of speculation in the provision of investment services.

The SIDRU of Saint-Germain-en-Laye has finally lost its case. This household waste treatment syndicate of several municipalities in the western region of Paris took legal action against Depfa Bank plc in May 2011 and did not hesitate to publicize its case against so-called "toxic" swaps. France's Court of Cassation, however, has put an end to

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