By Steve Slater
LONDON, Sept 20 (Reuters) - India's Unitech must repay a$150 million loan to Deutsche Bank, but a smaller dispute can goto trial, a UK judge ruled on Friday, in a case which could seta precedent for whether a Libor interest-rate rigging scandalcan invalidate some deals.
Deutsche Bank sued Indian property firm Unitech last year for the repayment of a loan made in 2007 bya consortium of lenders and also for repayment of $11 millionowed for a related interest-rate swap.
The Indian firm counter-sued, saying the loan and swap dealwere linked to Libor interest rates, which at the time werebeing manipulated by some banks.
In a ruling at London's High Court, Justice Teare saidUnitech must repay the loan, adding that just because there wasevidence the Libor rate had been manipulated did not make a loanvoid.
However, he said the terms of the swap agreement and itsspecific link to a Libor contract were more contentious and thatissue should go to trial next year.
The court case is one of two in the UK that are seen astests for whether the manipulation of Libor can invalidate somedeals or if banks mis-sold products based on Libor, which isused to price millions of financial contracts around the world.
Barclays is being sued for up to 70 million pounds($112 million) by Guardian Care Homes, a UK residential carehome operator which alleges the bank mis-sold it interest ratehedging products that were based on Libor.
Barclays, UBS and Royal Bank of Scotland have been fined by U.S. and UK authorities for manipulatingLibor, and Deutsche is among several other banks underinvestigation.
Deutsche Bank said in a statement: "The defendant'sunfounded allegations about Libor are an attempt to delaypayment and divert attention from its remaining unpaid debt on aswap agreement tied to the loan."
Richard Gwynne, Unitech's lawyer, declined to comment.
Britain's Court of Appeal is expected to make a ruling nextmonth on whether Libor manipulation can be used in the casesagainst both Barclays and Deutsche Bank. Barclays' case againstGuardian Care Homes has been delayed until April 2014 so theappeal decision can be heard.