Trendtex Trading Corporation v Credit Suisse

Trendtex Trading Corporation v Credit Suisse [1982] AC 679

The legal assignment of a debt and the laws of champerty.

Facts

Trendtex had a claim in England against the Central Bank of Nigeria [‘CBN’] for damages amounting to approximately USD 14 million. CBN sought the assistance of Credit Suisse for the recovery of this debt, which Credit Suisse was also going to use in order to aid it to help it recover its own debt from Trendtex. The primary question arose as to the legal assignment of the debt and as to whether It is void as offending the English laws against champerty and maintenance/

Issue

The question arose as to whether the legal assignment of the dishonoured letter of credit debt enforceable or whether it violated the laws of champerty.

Held

The Court held that, in assessing the enforceability of a claim, the Court ought to examine the totality of the transaction and its context. The Court further held that, under English law, “an assignee who can show that he has a genuine commercial interest in enforcement of the claim of another and to that extent takes an assignment of that claim to himself is entitled to enforce the assignment unless by the terms of the assignment he falls foul of our law of champerty.” (p 703). Accordingly, the Court held that on the facts of the case, even though Credit Suisse had a genuine commercial interest in the success of the CBN claim for debt from Trendtex, the agreement assigning the debt between CBN and Credit Suisse had involved a likelihood of profit being made by Credit Suisse out of the cause of action, and that in itself involves trafficking in litigation and thus violating the laws of champerty. Thus, the assignment was struck down as champertous.

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