Masterclass in Company Law:

Shareholder Claims: Reflective loss after Sevilleja v Marex Financial Ltd

In this event Dr Eva Micheler will discuss the reflective loss principle with Sophie Weber who acted as junior counsel for Marex Financial Ltd. 

While the pandemic was going on over the summer exciting developments have occurred in the area of company law. In July the UK Supreme Court decided the much awaited decision in Sevilleja v Marex Financial Ltd. Mr Sevilleja was accused of asset stripping two companies controlled by him. The companies were thus unable to pay their debt to Marex Financial Ltd. Marex sued Sevilleja for those debts. Mr Sevilleja raised as a defence that Marex's loss was reflective of the loss of the company. The defence is now blocked by the decision. 

The case contains important obiter dicta. Four of the seven judges observed that there exists a rule preventing shareholders to sue for loss that is reflective of a loss suffered by the company. On that view a shareholder can, for example, not sue the company for a reduction in the value of his shares. This is sometimes referred to as the 'reflective loss principle'. Three of the seven judges concluded that the reflective loss principle does not exist.

We will examine where the law stands and also if and if so how the 'reflective loss principle' can be justified.

The Supreme Court decision may be found here.

Eva Micheler studied law at the University of Vienna and at the University of Oxford before joining the LSE Law Department in 2001. She is an Associate Professor in Law at the London School of Economics and an ausserordentlicher Universitätsprofessor at the University of Economics in Vienna, where she took Habilitation in 2003. Professor Micheler is also on the management committee of the Systemic Risk Centre at LSE. She was a TMR fellow at the Faculty of Law of the University of Oxford and teaches regularly at Bucerius Law School in Hamburg.

Sophie Weber is a barrister at One Essex Court specialising in commercial litigation and arbitration with particular expertise in jurisdiction and choice of law. As well as acting as sole counsel, Sophie has experience of being led in substantial, complex and high-value litigation in the High Court, the Court of Appeal and the Supreme Court and various international arbitrations (including but not limited to ICC rules). Sophie is fluent in French, German and Luxembourgish and has a decent working knowledge of Spanish, which has led to her being regularly instructed in cases which utilise her language skills and providing expert opinions on English law for use in foreign proceedings including Germany and Belgium. Sophie is also a member of the Attorney General’s C Panel of Counsel. Prior to joining the Bar, Sophie studied for an undergraduate degree in English and French laws at the King’s College London and Université Paris 1 Panthéon-Sorbonne and read for the BCL at Magdalen College (Oxford) where she also completed an MPhil thesis under the supervision of Professor Adrian Briggs. She has taught a variety of private and commercial law courses, including competition law at the University of Oxford, English contract law and French private law at King’s College London. 

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