The High Court has granted stakeholder relief under CPR Part 86 to a London branch of an Indian bank, finding that two rival parties had competing claims to a USD 11 million deposit: SP Hinduja Banque Privee SA v Bank of Baroda [2025].
This decision is the latest in a series of stakeholder applications under CPR Part 86 (see our previous blog posts here). As a reminder, CPR Part 86 allows a person facing competing claims over money, goods or chattels (a "stakeholder") to apply to the court for directions on how to deal with the disputed property, provided they claim no personal interest in it and are willing to transfer it into court or as directed.
The decision will be of interest to financial institutions navigating competing claims to funds or assets. It illustrates the threshold for stakeholder relief under CPR Part 86. It reaffirms that, as per Skatteforvaltningen (The Danish Customs And Tax Administration) v Shah & Ors [2020] EWHC 1658 (Comm), the threshold is not high: the applicant must show that there are "competing claims" (including proprietary claims) in the sense that compliance with one claim would expose them to the risk of liability to another. However, if one party's claim is so weak as to be entirely frivolous or insubstantial, the court may exercise its discretion not to grant relief. The stakeholder procedure is intended to address genuine situations of doubt, not to provide a platform for plainly unmeritorious claims.
One of the most interesting aspects of the decision is the way in which the court dealt with the question of jurisdiction. In this case, the competing claims faced by the bank were from its customer and a third party. The contract between the bank and its customer was subject to English law and jurisdiction. However, the separate contractual relationship between the customer and the third party (to which the bank was not a party) was arguably subject to an exclusive Swiss jurisdiction agreement. In the court's view, that did not affect its ability to grant relief, as it was not resolving the dispute between the bank's customer and the third party, but rather giving directions as to two separate claims by each of the customer and the third party against the bank. It considered that there was no need to refer to the Swiss courts the incidental issues of Swiss law and contract that might have to be resolved. The issue for the English court was narrow, namely whether – as against the bank – the customer or the third party was entitled to give instructions in relation to the funds.
We consider the decision in more detail below.
Background
The case arises from a rift within the Hinduja family. In 2013, a Swiss private bank controlled by the Hinduja family (Hinduja Banque) placed nearly USD 31 million on deposit with the London branch of an Indian bank (Bank of Baroda). These funds originated from a Bahamian company (Amas) linked to the Hinduja family, for which Hinduja Banque was acting as a mandatory (ie a fiduciary) under a Swiss law governed fiduciary agreement. The deposit was made pursuant to a memorandum of deposit between Hinduja Banque and Bank of Baroda, governed by English law. The purpose of the deposit was to serve as security for a credit facility extended by Bank of Baroda to one of the Hinduja brothers.
By 2024, the credit facility had been repaid and the remaining USD 11 million deposit was due for return. However, a dispute arose over who was entitled to receive the funds. Amas instructed Bank of Baroda directly to transfer the funds to its own account. It argued that Hinduja Banque was merely an agent and that Bank of Baroda should recognise Amas' entitlement. In contrast, Hinduja Banque specifically prohibited Bank of Baroda from returning the funds to any party except to Hinduja Banque (and refused to agree to indemnify Bank of Baroda against any claims that Amas might bring). Hinduja Banque claimed that, as the named account holder, the funds should be returned to it. It maintained that any obligation to pass the funds on to Amas was a matter governed by Swiss law and subject to Swiss KYC compliance.
Hinduja Banque subsequently commenced proceedings against Bank of Baroda. In turn, Bank of Baroda applied for stakeholder relief under CPR Part 86 against Hinduja Banque and Amas, or alternatively for an order to pay the residual deposit into court pending resolution of the competing claims. Hinduja Banque opposed the application, arguing there was no competing claim and instead applied for summary judgment in its favour. Hinduja Banque contended that payment to it would satisfy any entitlement Amas might have and protect Bank of Baroda from liability, meaning neither Amas nor Bank of Baroda would be prejudiced.
Decision
The High Court found that this was an appropriate case for stakeholder relief. In its view, Bank of Baroda did face competing claims and determining each party's entitlement was the appropriate course under the overriding objective.
The key issues in the case which will be of interest to financial institutions are set out below.
Competing claim for the purpose of CPR Part 86
As its starting point, the court noted that CPR Part 86.1 empowers it to make various orders in circumstances where: (i) a stakeholder is under a liability in respect of a debt or in respect of any money; and (ii) competing claims are made or expected to be made against the stakeholder in respect of that debt or money by two or more persons.
Next, the court considered whether Amas had a "competing claim" for the purpose of CPR Part 86.1 in respect of the debt.
Legal principles
The court drew on established principles regarding stakeholder applications under CPR Part 86. Referring to Skat, the court reaffirmed that "competing claims" are claims which are inconsistent "in the sense that compliance with one claim exposes the stakeholder to the risk of liability to the other".
The court acknowledged that stakeholder relief may still be appropriate even where competing claims are not necessarily inconsistent. For example, where a bank holds funds alleged to be fraud proceeds and third parties (the victims of the fraud) assert a constructive trust, payment to the account holder may not defeat the third party claim or expose the bank to liability. However, stakeholder relief may be granted in these circumstances and so it is clear that a proprietary claim is sufficient to constitute a "competing claim", as illustrated in Global Currency Exchange Network Ltd v Osage 1 Ltd [2019] EWHC 1375 (Comm) (see our blog post).
The court further clarified that:
- While a competing claim under CPR Part 86 need not have a real prospect of success, a mere assertion is not enough.
- Stakeholder relief remains appropriate even where one or both of the rival claims are complex or difficult, as recognised in Skat and Global Currency Exchange.
- Competing claims under CPR 86.1 need not be claims that the English court can itself resolve. As established in ST Shipping and Transport Pte Ltd v Space Shipping Ltd (The CV Stealth) [2018] EWHC 156 (Comm), a "claim" for these purposes is not limited to one that is or may be the subject of English proceedings.
- CPR Part 86 refers to claims "made or expected to be made". As per Global Currency Exchange, this was a question of fact for each case. There must be a real foundation to the expectation, but the claim need not be a certainty.
The present case
Applying these principles to the present case, the court found that there was no doubt that Bank of Baroda was subject to a claim by Hinduja Banque. The key question was whether Bank of Baroda was subject to a competing claim by Amas.
On the facts, the court was satisfied that there was a sufficiently non-frivolous argument that, as a matter of Swiss law, Hinduja Banque's claim had been assigned to Amas by operation of law so that Amas, rather than Hinduja Banque, was the party entitled to claim the deposit from Bank of Baroda, or that payment to Hinduja Banque would involve a breach of fiduciary duty by Hinduja Banque which Bank of Baroda would have assisted so as potentially to make it liable. This was enough to establish competing claims and engage the court's jurisdiction under CPR Part 86.
Swiss jurisdiction agreement
The court considered (and rejected) the suggestion that the exclusive Swiss jurisdiction agreement between Hinduja Banque and Amas (which the court assumed governed their contractual relationship for the purposes of the present application) should affect its exercise of discretion to grant relief under CPR 86.
In the court's view, it was not resolving a dispute between Hinduja Banque and Amas, but two separate claims by each of Hinduja Banque and Amas against Bank of Baroda. As such, Bank of Baroda required CPR Part 86 relief to avoid exposure to the risk of double liability. Accordingly, the proceedings were not resolving issues arising under the Swiss fiduciary agreement, but rather an issue under the English law governed deposit memorandum with Bank of Baroda (and its interaction with the Swiss arrangement).
Additionally, the court saw no sound discretionary reason to refer the narrow Swiss law issues to the Swiss court. No party proposed a clear plan or timeline for resolving them there, nor showed they could be resolved more effectively than in the current proceedings. The court stressed that the issue to be resolved in the stakeholder proceedings was narrow, namely whether Amas or Hinduja Banque was entitled to the deposit and to give instructions to Bank of Baroda in relation to the deposit. Other issues relating to the Swiss banking relationship were properly a matter for the Swiss courts and not the English court.
Summary judgment
The court highlighted that the decision to grant stakeholder relief did not determine Hinduja Banque's summary judgment application. While it could summarily determine a weak claim under CPR Part 86 even if it met the threshold for a "competing claim", it found that Amas' claim was not so weak as to justify summary dismissal. The issues required expert evidence and were unsuitable for summary determination at this stage.
Accordingly, the court indicated that it would give directions for the trial of the narrow stakeholder issue, enabling it to either direct Bank of Baroda on how to pay the funds or to determine how any payment into court should be discharged.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
