Following its entry into receivership during the height of the financial crisis in October 2008, the Icelandic bank Landsbanki Islands hf. (now "LBI") became liable to Raiffeisen Bank ("RBI") in respect of a series of "repo" transactions under which a portfolio of bonds had been provided as collateral for a loan. As the Defaulting Party, LBI had to pay RBI (the Non-Defaulting Party) a sum representing the agreed Repurchase Price for the securities minus the Default Market Value of Equivalent Securities, pursuant to the terms of the Global Master Repurchase Agreement (2000 version).

The issue for the English Court of Appeal in LBI EHF v Raiffeisen Bank International AG [2018] EWCA Civ 719 was whether the Non-Defaulting Party's assessment of the "fair market value" of the securities could be based on prices achieved or quotations obtained in a distressed or illiquid market, or whether a "normal" trading environment should be assumed for the purposes of valuation.

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