In a judgment rendered on 27 January 20261, the Geneva Court of Justice reiterated that this classification depends on the actual contractual relationship rather than solely on the wording of the contractual documentation. This distinction is particularly important where an investor suffers substantial losses and seeks to attribute responsibility to the bank.
The case concerned a businessman and his bank. Several years earlier, he had invested in shares acquired prior to the initial public offering of a French company. After a sharp rise until 2017, the share price fell. The securities were initially held in a sub-account before being transferred to the client’s main account. In 2016, the bank reclassified some accounts historically qualified as ‘advisory’ (investment advice agreements) as ‘execution–only’ relationships. Claiming that he was bound to the bank by an asset management mandate, the client reproached the bank for failing to monitor price developments and for not having sold his positions in due time. The client claimed several million euros in damages.
Banks would therefore be well advised to ensure consistency between their contractual documentation and the services actually provided
The Court began by recalling the classic distinction between a management mandate (decisions taken by the bank), investment advice (recommendations with the final decision resting with the client) and execution-only (simple execution without any general duty). This distinction is far from being purely theoretical, as it directly determines the scope of the bank’s obligations.
The Court then specified that the classification of a banking relationship does not depend exclusively on the contractual documents signed by the parties. The judge must ascertain the parties’ true intent and common understanding on the basis of indicia, including the content of declarations of intent (whether written or oral), even those made prior to the conclusion of the contract, subsequent facts, and the overall context of the contractual relationship.
In the present case, the client argued that the disputed investments fell within the scope of an asset management mandate. He explained that his relationship manager would present him with investment opportunities, obtain his approval, and then execute the corresponding transactions.
However, the Court held that such an arrangement does not correspond to an asset management mandate. As long as the client retained decision-making authority and gave his prior consent for each transaction, the relationship could, at most, qualify as investment advice.
The Court further observed that the client had agreed to be treated as a qualified investor and had signed several documents relating to ‘Key Client Partners’ (‘KCP’) services, provided strictly on a non-advisory basis. These documents stated that it was for the client to determine whether a proposed investment was appropriate and to assess the risks involved. The client had also confirmed, in a ‘Suitability Questionnaire’, that he was knowledgeable about all financial market products.
Finally, the Court underlined that the initial acquisition of the disputed investment had been carried out with the assistance of an external advisor appointed by the client. It also noted that the investment had been made within the framework of the ‘KCP’ services, which entail a reduced level of investor protection.
With regard to the sub-account opened for the initial acquisition of the disputed investment, the Court found that an ‘execution-only’ relationship existed. As regards the disputed investments held in the main account, the Court noted that these had likewise been acquired within the KCP framework. It pointed out, however, that the main account fell broadly under an investment advisory relationship and left open the question of the precise classification of the disputed transactions, considering that the outcome of the dispute would remain the same even under an advisory relationship framework.
Even assuming an advisory relationship, the Court held that the client’s status as a qualified investor, his contractually recognised financial knowledge and his commitment to monitor his positions excluded any duty of supervision or information on the part of the bank regarding the evolution of the disputed investments.
The Court also declined to recognise the existence of a special relationship of trust that could extend the bank’s duties. It therefore found no breach of the duties of information, advice, warning or supervision as alleged by the investor.
This judgment illustrates a restrictive approach to the bank’s due diligence towards a qualified investor. The Court reiterates that the client’s status, his contractually recognised financial knowledge and the specific features of the investment in question remain decisive in assessing the bank’s obligations, even where the parties maintain an ongoing relationship. That said, the classification of a banking relationship cannot be reduced to contractual provisions alone. The context of the relationship may well reveal a different reality. Banks would therefore be well advised to ensure consistency between their contractual documentation and the services actually provided, as contrary indicia may, in certain circumstances, lead to an extension of their duties.
1Judgment of the Geneva Court of Justice of 27 January 2026, ACJC/151/2026
