CF Partners (UK) Llp v Barclays Bank Plc & Anor

Factual and Procedural Background

This claim concerns CF Partners (UK) LLP ("CFP") seeking compensation for alleged breaches of an exclusivity agreement and misuse of confidential information in relation to the pursuit and acquisition by Barclays Bank PLC ("Barclays") of Bryggpipan AB ("Tricorona"). CFP contends that Barclays misused confidential information disclosed in the context of Project Arctic Fox/Carbonara, a proposed acquisition of Tricorona by CFP with financial assistance from Barclays, to acquire Tricorona for its own account under Project Pomodoro, thereby breaching duties of confidence and exclusivity.

Tricorona operated in the carbon credits market with a large portfolio of Certified Emission Reductions ("CERs"), including a significant proportion of Large Hydro CERs, which were difficult to value and trade due to regulatory and market uncertainties. CFP identified an arbitrage opportunity based on the difference between Tricorona's market capitalisation and the intrinsic value of its CER portfolio, seeking to realise this through a leveraged buy-out requiring external financing and equity partners.

CFP initially approached Barclays through IVC International Limited ("IVC"), which had an existing relationship with Barclays. Confidentiality agreements were entered into between CFP and IVC, and between IVC and Barclays, but CFP was not a party to the latter. CFP alleges that Barclays breached duties of confidence and exclusivity owed in equity and/or contract and that Tricorona is liable for inducing breaches and for its own breaches of confidentiality.

The case involved extensive factual and expert evidence over a protracted trial, with numerous witnesses from CFP, Barclays, and Tricorona, and complex issues concerning the carbon credit market, contractual and equitable duties, and the conduct of the parties. The court was assisted by agreed statements of fact, lists of issues, and extensive documentary evidence.

Legal Issues Presented

1. What were the nature and scope of duties owed between the parties in contract and in equity?
2. Did CFP provide confidential information to Barclays and/or Tricorona the misuse of which is actionable?
3. What was the scope and duration of any duty of confidence?
4. Did the Defendants misuse CFP's confidential information for Project Pomodoro?
5. Did Barclays induce Tricorona to breach its contractual duty of confidence to CFP?
6. Are Barclays and Tricorona jointly liable for each other's equitable breaches of confidence?
7. Did Barclays agree with CFP not to acquire Tricorona or conflict itself from acting on CFP's proposed acquisition?
8. Did Tricorona induce Barclays to breach its contractual agreement with CFP?
9. If actionable misuse by Defendants is established, what are the appropriate remedies for CFP?
10. Is CFP liable to Tricorona on Tricorona's counterclaim and what remedies apply?
11. Do facts giving rise to Tricorona's counterclaim provide any defence to either Tricorona or Barclays in respect of CFP's claims?

Arguments of the Parties

Appellant's Arguments (CF Partners)

• CFP contends that Barclays misused confidential information provided during Project Arctic Fox/Carbonara to pursue and acquire Tricorona for its own benefit, breaching duties of confidence and exclusivity.
• CFP claims that the confidential information included a composite "Big Idea" revealing the true value of Tricorona's portfolio, particularly the Large Hydro CERs, and evidence of demand from compliance buyers, which Barclays did not appreciate before.
• CFP asserts that Barclays' failure to disclose a prior conflict of interest and failure to maintain effective Chinese Walls facilitated misuse of confidential information.
• CFP argues for compensation based on a hypothetical negotiation (Wrotham Park damages) reflecting the value of the confidential information and its use, seeking damages of at least £10 million.
• CFP denies fiduciary relationship claims but relies on equitable duties of confidence and contractual exclusivity obligations.

Defendants' Arguments (Barclays and Tricorona)

• Barclays contends that the opportunity and information provided by CFP lacked confidentiality and that any duty of confidentiality was limited in scope and time, expiring by September 2009.
• Barclays denies misuse of confidential information in any material way and asserts that changes in market conditions and regulatory developments were the main drivers of its acquisition of Tricorona.
• Barclays maintains that no enforceable exclusivity agreement existed with CFP, and the Exclusivity Release terminated any such obligations.
• Barclays argues that any contact with Tricorona beyond day-to-day hedging was permitted or consented to by CFP, and that internal Chinese Wall policies do not create enforceable duties.
• Tricorona denies misuse of confidential information and joint liability, asserting no breach of duty and that CFP misused Tricorona's confidential information, raising an unclean hands defence.
• The Defendants challenge the value and confidentiality of the Expressions of Interest and parts of the information provided by CFP.

Table of Precedents Cited

Court's Reasoning and Analysis

The court carefully analysed the extensive factual matrix, the nature of the carbon market and the parties' expertise, and the contractual and equitable framework governing confidentiality and exclusivity obligations. It distinguished between the duty of confidence (protecting information) and the obligation of exclusivity (restricting conduct), finding that CFP never became party to any enforceable exclusivity agreement with Barclays and that the Exclusivity Release effectively terminated any such obligations.

The court found that Barclays and Tricorona owed equitable duties of confidence to CFP in relation to confidential information provided in the context of Project Arctic Fox. This information comprised a composite "Big Idea" revealing the undervaluation of Tricorona's portfolio, especially the Large Hydro CERs, and evidence of demand from compliance buyers, none of which was publicly available or fully appreciated by Barclays or Tricorona before CFP's involvement.

Barclays misused this confidential information from early 2009 onwards, particularly through Ms Patel, who was pivotal in developing a strategic relationship with Tricorona that ultimately culminated in Barclays' acquisition of Tricorona under Project Pomodoro. The court rejected Barclays' contention that any use was limited to day-to-day hedging and that the duty of confidentiality had expired by September 2009. It also found that Tricorona misused confidential information provided by CFP, though the resulting loss was comparatively small.

The court rejected CFP's claims for exclusivity breaches and any rectification or estoppel preventing Barclays from acquiring Tricorona. It held that the Exclusivity Release was clear and effective. The court also found that Barclays and Tricorona acted in concert in breaching their equitable duties of confidence, making them jointly liable.

In assessing remedies, the court declined to order an account of profits, concluding that damages were the appropriate remedy given the absence of a fiduciary relationship and the commercial context. It adopted a Wrotham Park approach to assess damages by reference to a hypothetical negotiation in January 2009 for the price of release from confidentiality restrictions.

The court found that the confidential information was of considerable value and that the hypothetical negotiation would likely have resulted in a compensation figure of approximately £10 million, based on brokerage fees for forward sales of a proportion of Tricorona's CER portfolio, particularly Large Hydro CERs. It rejected claims for an equity stake or larger sums, considering them disproportionate and inconsistent with the parties' positions at the time.

The court also rejected the defendants' unclean hands defence, finding that CFP's breaches of Tricorona's confidentiality were minor and did not justify denying CFP equitable relief. It further dismissed Tricorona's counterclaim for breach of confidence as not materially affecting the overall compensation.

Holding and Implications

DISMISSED the claims against Barclays and Tricorona for breach of exclusivity obligations.

UPHELD the claims for breach of equitable duties of confidence owed by Barclays and Tricorona to CFP in relation to confidential information provided in Project Arctic Fox.

ORDERED that Barclays and Tricorona are jointly liable for breaches of confidence.

AWARDED CFP damages assessed on a Wrotham Park negotiation basis, fixed at approximately £10 million, representing a reasonable fee for release of confidentiality obligations, reflecting the value of the confidential information and its misuse.

The direct effect is that CFP is entitled to compensation for misuse of its confidential information by Barclays and Tricorona. No new precedent was established beyond the application of established principles of equitable confidence, contractual interpretation, and remedies. The decision underscores the importance of clear contractual terms, effective internal controls (such as Chinese Walls), and disclosure obligations in complex commercial transactions involving confidential information.