Laura WilesIn a directions application, the High Court concluded that the joint special administrators (JSAs) of Argentex were not entitled to terminate customer contracts under the firm’s terms of business for the purpose of protecting the firm’s economic interests.
Argentex offered foreign exchange contracts and was authorised by the FCA as an electronic money institution (EMI) and MiFID investment firm. It entered special administration on 21 July 2025.
The JSAs of Argentex – Anthony Wright, Daniel Conway and David Hudson of FRP – sought directions on the construction of contractual ‘close out’ provisions between the firm and its customers. Specifically, the JSAs wanted to determine if they were entitled to trigger the ‘close out’ provisions under Argentex’s general terms and its terms specific to its MiFID business (MiFID terms), which would allow them to wind down future trades where customers would be liable to pay sums to the firm. The contracts included both ‘in the money contracts’ i.e. those with a positive value against current market price such that the firm would have liability to the customer if closed out immediately, or ‘out of the money’ i.e. those with a negative value against current market price such that the customer would have liability to the firm at the same point.
The JSAs contended that closing out the contracts was necessary to protect Argentex’s interests, but the respondent customers – including both ‘in the money’ and ‘out of the money’ parties – argued that the firm remained liable to perform its obligations.
Specifically, the JSAs argued that clause 13.2(h) of the general terms – which gave Argentex a close out right should the firm “reasonably [consider] it necessary for its own protection” – and clause 11.4(c) of the MiFID terms – which gave Argentex a cancellation right in its “absolute discretion […] if necessary to protect Argentex’s interests” – allowed them to terminate contracts for Argentex’s protection.
However, the Court held that there was no express clause allowing termination based on Argentex’s insolvency – while the clauses included customer insolvency as a ground for termination, there was no equivalent provision for Argentex’s own insolvency. The Court also concluded that economic circumstances were not an intended trigger, and that the alternative interpretation would have allowed Argentex to “escape a bad bargain” or crystallise a profit by closing contracts early when advantageous. Overall, the protection of Argentex’s economic interests did not justify termination of the contracts.