Thirty years of ultra vires: local authorities, national courts and the global derivatives markets

Jo Braithwaite

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Between 1987 and 1989, Hammersmith and Fulham London Borough Council entered into nearly 600 derivatives transactions. In 1991, the House of Lords held that it lacked the capacity to do so and the contracts were therefore void. Taking this landmark litigation as its starting point, this article seeks to explain the persistence and evolution of the problem of ultra vires, as it has affected local authorities participating in the derivatives markets. Specifically, the article traces how the derivatives markets have transformed beyond recognition in terms of their size, complexity and global reach over the three decades since the Hammersmith litigation, and it explores the resulting changes in the ultra vires disputes which come before the English courts. The article goes on to examine in detail the recent ‘second wave’ of ultra vires decisions, involving public bodies from Norway, Holland and Italy, amongst others. The analysis demonstrates how the global nature of the contemporary financial markets has further complicated the ultra vires problem, generating novel and difficult questions for the English courts. The article concludes that this area of law now contains a significant contradiction, between the English courts’ market-minded approach on the one hand, and the harshness of the traditional doctrine of ultra vires on the other.

Keywords: ultra vires; derivatives; financial regulation; local authories; ISDA (search for similar items in EconPapers)
JEL-codes: F3 G3 (search for similar items in EconPapers)
Date: 2018-09-26
References: Add references at CitEc
Citations:

Published in Current Legal Problems, 26, September, 2018, 71(1), pp. 369 – 402. ISSN: 0070-1998

Downloads: (external link)
http://eprints.lse.ac.uk/87352/ Open access version. (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:87352

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().