Caveat Emptor For Sophisticated Investors

Springwell Navigation Corp v JP Morgan Chase Bank and Others [2010] EWCA Civ 1221

Springwell was an investment vehicle for a group of companies owned by the Polemis shipping family. It was a sophisticated investor. It invested in notes issued by Chase, but referenced to underlying Russian bonds. As a result of the Russian financial crisis in 1998, the bonds became far less valuable. Springwell claimed over US$700m in damages from Chase, based on misrepresentation and other grounds. Its claim failed at first instance (Gloster J). Springwell appealed the decision on misrepresentation.

The Court of Appeal dismissed the appeal. It rejected Springwell's arguments as follows:

• No misrepresentations were made. The context was key. Although a Chase employee had referred to the risk profile of the notes as being conservative, that remark should be considered in the context of a particular investor and market. Springwell was a sophisticated investor who understood the