Bankers Trust wins $69 million derivatives case

Bankers Trust wins $69 million derivatives case

NEW YORK (Reuter): Bankers Trust New York Corp said the commercial court of the English High Court of Justice in London ruled in the bank's favor in a US$69.2 million lawsuit against the Indonesian company PT Dharmala Sakti Sejahtera.

Bankers Trust said the litigation involved a derivatives dispute between it and the Indonesian company. Bankers Trust had sued Dharmala.

The court also ruled that Bankers Trust must be reimbursed for its legal costs.

Bankers Trust said the case involved swaps contracts between it and the Indonesian company that were entered into in early 1994 under the terms of the International Swaps Dealers Association (ISDA) master agreement.

Bankers Trust said Dharmala sought to escape from the contracts by alleging that Bankers Trust misrepresented the trade and breached duties it assumed to advise Dharmala.

Bankers Trust said the court, in its ruling, affirmed that usual principles of commercial law apply in the derivatives market.

Bankers Trust said the court declined to find that ordinary derivatives dealings with commercial counterparties impose extraordinary duties on derivatives dealers.

Dharmala alleged that Bankers Trust misrepresented terms of the trades. It alleged that the bank said the transactions were safe, involved limited risk and would be replaced at no cost if losses occurred.

Bankers Trust said that after a three-week trial in July, the court concluded that Bankers Trust never made such representations, acted honestly and did not mislead the Indonesian firm.

Bankers Trust said the court noted that while the bank's salesman may have employed considerable enthusiasm, skill and persuasiveness in marketing the trades, this did not mean he had acted dishonestly or had misrepresented the trades.

Bankers Trust said the court concluded Dharmala had considerable experience in evaluating complex swaps transactions and had represented itself as capable of independent evaluation. Bankers Trust said the court found that Dharmala's assertions that Bankers Trust assumed an obligation to advise the Indonesian firm were not valid.

Bankers Trust derivatives transactions have produced disputes with several U.S. firms.

Bankers Trust is currently in a legal battle with Procter & Gamble Co. Earlier this year it settled a dispute with Gibson Greetings Inc.

Bankers Trust stock was up 1-5/8 to 66-1/2 in early afternoon trading. Wall Street traders attributed the rise to the bank's victory in the Dharmala case.