page_title: Local authorities swaps litigation
hierarchical_section_title: Local authorities swaps litigation
caption_attribution_description: English: Shepherd's Bush Road in London Borough of Hammersmith and Fulham
context_page_description: The local authorities swaps litigation refers to a series of cases during the 1990s under English law relating to interest rate swap transactions entered into between banks and local authorities. The House of Lords ruled that such transactions were unlawful. As a result of the decision over 200 separate actions were filed as hundreds of interest rate swap contracts had to be unwound by the courts at great expense.
  The law relating to recovery of payments made under contracts subsequently held to be legally void was relatively undeveloped at the time, and the numerous cases led to a rapid evolution in terms of the development and understanding of the English law of restitution and unjust enrichment. Many of the subsequent cases were appealed to the Court of Appeal and three were appealed all the way to the House of Lords. In the course of those proceedings, in addition to the development of English law of unjust enrichment, numerous long established legal precedents of general application were overturned.
  The situation was described as a "debacle", and the final costs were enormous.
context_section_description: The local authorities swaps litigation (sometimes called simply the swaps cases) refers to a series of cases during the 1990s under English law relating to interest rate swap transactions entered into between banks and local authorities.  The House of Lords ruled that such transactions were unlawful.  As a result of the decision over 200 separate actions were filed as hundreds of interest rate swap contracts had to be unwound by the courts at great expense.
  The law relating to recovery of payments made under contracts subsequently held to be legally void was relatively undeveloped at the time, and the numerous cases led to a rapid evolution in terms of the development and understanding of the English law of restitution and unjust enrichment.  Many of the subsequent cases were appealed to the Court of Appeal and three were appealed all the way to the House of Lords.  In the course of those proceedings, in addition to the development of English law of unjust enrichment, numerous long established legal precedents of general application were overturned.
  The situation was described as a "debacle", and the final costs were enormous.  There is no accurate record of the total legal costs over the totality of the legal actions, but the banks were estimated to have written off £600 million as either unrecoverable or compromised as part of the litigation.  No one has tried to produce estimates for any corresponding losses to the local authorities.
caption: Hammersmith and Fulham, where the genesis of the local authorities swaps litigation began.
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