Hedge funds use human rights laws to make money

Date: Thursday, January 29, 2009
Author: Tom Whitehead, Telegraph

Hedge funds are taking advantage of human rights legislation in a bid to claim money back from the Government.

Two funds are part of an action claiming the nationalisation of Northern Rock breached their rights because they are set to lose all the value of the shares they had in the bank.

They are latest organisations to use the Government's own human rights laws against them.

Figures also showed companies and individuals are using such legislation against HM Revenue and Customs in disputes over tax.

Stephen Grosz, head of public law and human rights at Bindman & Partners, said: "Whilst the number of cases coming to court may have declined, the use of the Human Rights Act continues to evolve in unexpected ways."

Research by legal information provider Sweet and Maxwell found some 327 human rights cases were reported last year, although that was down on the 379 in 2007.

It found human rights arguments are increasingly being used in cases that might normally be seen as commercial disputes.

Earlier this month, hedge funds RAB Special Situations and SRM Global Master Fund, were part of an action in the High Court arguing that the nationalisation of Northern Rock had deprived them of their property (the value of Northern Rock shares they owned) and was therefore in breach of the Human Rights Act.

They claim there is little prospect of compensation for the shares, which they argue were worth around 3 when the bank was nationalised.

Mr Grosz added: "It will be interesting to see whether the Government's intervention in the banks and the financial markets will lead to more Human Rights claims. Investors and institutions seem to be showing a willingness to explore claims under the Human Rights Act as a way to recoup their losses."

The Sweet and Maxwell research also found that six per cent of cases using human rights arguments were disputes with HM Revenue & Customs over tax issues and almost 12 per cent involved asylum, immigration and deportation cases.