Argentex JSAs barred from forcing early close out of FX contracts

The High Court has refused to let the joint special administrators of Argentex LLP unilaterally close out more than 3,000 open foreign exchange contracts, ruling that the firm cannot rely on broadly worded termination provisions to exit what have become economically disadvantageous trades. ICC Judge Agnello KC held that clauses in Argentex’s General Terms and MiFID Terms did not permit early termination on the basis of insolvency, loss of hedging arrangements, or market volatility, and could not be stretched to allow Argentex to crystallise a favourable mark to market position at the expense of customers who contracted for fixed future settlement dates.

Argentex entered special administration in July 2025 after a collapse in the US dollar triggered significant margin calls on its hedging contracts, leaving the trading book unhedged and the firm unable to meet FCA liquidity thresholds. Joint special administrators Anthony Wright, David Hudson and Daniel Conway of FRP Advisory argued that contractual “close out” provisions allowed them to terminate forward and option contracts now, which would convert current out-of-the-money customer positions into immediate receivables for the estate. Several customers, led by Seasalt Limited, opposed the application and maintained that Argentex remained obligated to perform until contractual maturity.

The Court sided with the customers and found that the contractual structure placed the risk of market volatility and hedging strategy on Argentex. Nothing in the agreements suggested that customers had accepted a term allowing Argentex to walk away from fixed-rate future contracts simply because performance had become financially unattractive. ICC Judge Agnello also stressed that the contracts contained express rights to terminate for customer insolvency but no equivalent right linked to insolvency of Argentex. Construing the clauses to allow termination based on Argentex’s own economic hardship or administration status would, in the Court’s view, defeat the commercial purpose of forward contracts and undermine the negotiated exclusion of margin calls in arrangements like Seasalt’s.

Because the administrators had no contractual right to close out or terminate early, the Court declined to consider whether their proposed use of discretion would have satisfied standards of good faith or rationality. The requested directions were refused in full.

Read the decision here.

Richard Fisher KC of South Square (instructed by DLA Piper) represented Seasalt, while Marcus Haywood of South Square (instructed by Macfarlanes) represented certain other customers. Christopher Boardman KC and Kate Rogers of Radcliffe Chambers (instructed by Bird and Bird LLP) acted for the joint special administrators.