Slaughter and May advised Standard Life Aberdeen plc (“SLA”) on a contractual dispute with Lloyds Banking Group / Scottish Widows (“LBG”) in relation to LBG’s attempt to terminate a series of investment management agreements (“IMAs”) in respect of approximately £100bn of assets managed by members of the SLA group for LBG and customers of its Insurance and Wealth businesses.
On 14 February 2018, LBG sent a notice to SLA purporting to terminate the IMAs on the grounds that the SLA group, as the combined group of Standard Life plc and Aberdeen Asset Management plc following their merger in August 2017, was in “material competition” with the LBG group in the UK. SLA did not agree that LBG was entitled to terminate on these grounds. The dispute was later submitted to arbitration in London under the LCIA rules and governed by English law. After a five-day hearing in early March 2019, the Tribunal ruled in SLA’s favour by way of an award issued on 18 March 2019.
Following issuance of the award, SLA and LBG agreed a final settlement of the dispute. Under the terms of the settlement, the SLA group will continue to manage one third of the LBG assets until at least April 2022 (c.£35bn as at 30 June 2019), as well as receiving £140m in compensation for loss of profits in relation to the remaining two thirds of the assets, which are being transferred to third-party managers appointed by LBG.