Wednesday, 1 August 2012

UK: England and Wales: corporate capacity and derivatives

The ICLR has provided a summary of Standard Chartered Bank v Ceylon Petroleum Corporation [2012] EWCA Civ 1049, a decision of the Court of Appeal handed down last week concerning a company's capacity to enter into derivative contracts: see here. The summary's headnote reads: "In the absence of any indication to the contrary, a commercial entity set up by statute to engage in international and domestic trade had the capacity to enter into the whole range of transactions which a commercial organisation acting in that field of business would ordinarily undertake, including hedging or speculative transactions".

It should be noted that the company in question was formed under the Ceylon Petroleum Corporation Act 1961 and at issue was the operation of section 5 of the Act, which contained the company's objects. This said, the court accepted that there was no material difference between English law and the law of Sri Lanka.

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