Raiffeisen Zentralbank Osterreich AG v Royal Bank of Scotland – Case Summary

Raiffeisen Zentralbank Osterreich AG v Royal Bank of Scotland

High Court

Citations: [2010] EWHC 1392 (Comm); [2011] 1 Lloyd’s Rep 123; [2011] Bus LR D65; [2011] CLY 566.


This claim arose out of the collapse of Eron. The defendant had lent money to Enron, and then syndicated its loans to the claimant’s bank. As a result of Enron’s collapse, the loan could not be repaid. The claimant contended that it had been induced to enter the contract with the defendant by several material misrepresentations.

However, the defendant denied that the relevant representations had been made. They also relied on a clause of their contract which stated that the contractual documents contained no representation or warranty as to the accuracy of the information contained within them (‘the no reliance clause’). They argued that this estopped the claimant from arguing that they had relied on any pre-contractual representations. The claimant countered that this was an attempt to exclude liability and was void for unreasonableness under s.3 of the Misrepresentation Act 1967.

  1. Had the defendant made the representations in question?
  2. What was the effect of the ‘no reliance’ clause?
  3. Was the clause an exclusion clause within the meaning of s.3?

The court held in favour of the defendant on the grounds that the claimant had failed to establish that they had made the relevant representations. The Court went on to consider the other issues on an obiter basis:

  • The ‘no reliance’ clause created a contractual estoppel preventing the claimant from arguing that they relied on any of the defendant’s representations.
  • The ‘no reliance’ clause was not an attempt to exclude liability. Rather, it was an attempt by the parties to agree the basis on which information was being provided under the contract. It therefore fell outside of the scope of s.3 of the Misrepresentation Act 1967.
This Case is Authority For…

‘No reliance’ and ‘no representation clauses’ are capable of creating a ‘contractual estoppel’. This prevents the parties from arguing that the facts are otherwise than what the parties agreed them to be. It does not matter that the reality of the situation is different.

Whether a ‘no reliance’ or ‘no representation’ clause constitutes an exclusion of limitation clause depends on whether the clause:

‘goes to whether the alleged representation was made (or…was intended to be understood and acted on as a representation) or whether it excludes or restricts liability in respect of representations made, intended to be acted on and in fact acted on’.

This is a question of substance, not form. A key factor is ‘whether the clause attempts to rewrite history or parts company with reality’. As such, if representations have in fact been made, the effect of a ‘no representations’ clause is likely to exclude liability. It would therefore fall within the scope of s.3 of the Misrepresentation Act 1967.