One of the world's biggest credit ratings agencies and a European investment bank will begin an appeal in the Federal Court in Sydney today to try and overturn a landmark ruling that they misled local councils.

In late 2012, the court ruled that 13 New South Wales councils were deceived because Standard & Poor's gave complex investments a AAA credit rating, the highest investment ranking.

The councils lost most of their money when the product, a Constant Proportion Debt Obligation (CPDO), plunged in value during the global financial crisis.

The judge, Justice Jayne Jagot, granted them nearly $30 million in compensation.

S&P, ABN AMRO, the European bank which created the investments, and Local Government Financial Services, which sold the product to the councils, are appealing the judgment to the Full Court of the Federal Court.

Claimants and their losses: Bathurst Regional Council: $1 million

Bathurst Regional Council: $1 million Cooma Monaro Shire Council: $1.86m

Cooma Monaro Shire Council: $1.86m Corowa Shire Council: $933,225

Corowa Shire Council: $933,225 Deniliquin Council: $466,613

Deniliquin Council: $466,613 Eurobodalla Shire Council: $466,612

Eurobodalla Shire Council: $466,612 Moree Plains Shire Council: $1.9m

Moree Plains Shire Council: $1.9m Murray Shire Council: $933,225

Murray Shire Council: $933,225 Narrandera Shire Council: $1.86m

Narrandera Shire Council: $1.86m Narromine Shire Council: $466,612

Narromine Shire Council: $466,612 Oberon Council: $933,225

Oberon Council: $933,225 Orange City Council: $1.4m

Orange City Council: $1.4m Parkes Shire Council: $2.8m

Parkes Shire Council: $2.8m City of Ryde: $933,225

S&P told the ABC in a statement that it is not responsible for investment decisions and investors need to do their own analysis.

"It is bad policy to enforce a legal duty against a party like S&P, which has no relationship with investors who use rating opinions, yet impose no responsibility on those investors to conduct their own due diligence," the statement read.

"It turns S&P's predictions about the future into guarantees."

Standard & Poor's decision to give the investments a AAA or gold star investment ranking was criticised by Justine Jagot in November 2012.

The judge found S&P made negligent misrepresentations and had misled the councils.

It was the first court ruling of its kind worldwide against a credit ratings agency.

Justice Jagot said a description of the CPDOs as "grotesquely complicated" was accurate.

ABN AMRO and Local Government Financial Services (LGFS) were also found to have behaved in a misleading and deceptive way.

LGFS also was found to have breached its fiduciary duty to the councils.

Litigation funder John Walker, from Bentham IMF, financed the case for 12 of the councils.

He says CPDOs were high risk but were marketed as being as safe.

"It turned out to be very risky. It was simply a bet," he said.

Council says any overturn would have significant impact

Bathurst Regional Council was awarded more than $1 million in compensation by the court.

It originally got just $67,043 of its $1 million investment back.

Bathurst Regional Council Mayor Gary Rush says council spending plans will be affected if the judgment is overturned.

"Having to pay that money back would have a significant impact," he said.

"It would mean we have to curtail some of the maintenance opportunities or the development of infrastructure opportunities we are currently looking at."

CPDOs were created by ABN AMRO in 2006 and were described as the "poster child for the excesses of financial engineering" by researchers from the United States Federal Reserve.

In court documents, an ABN AMRO banker described the product as being like a casino.

"If you win you start again. If you lose, double your bet. Repeat. You have a great chance of winning (99.9 per cent) 1 pound, but a chance of losing the lot (0.10 per cent) if you lose 11 times in a row," ABN AMRO's David Poet wrote in an email.

The investments tracked corporate debt but as companies defaulted on their loans during the global financial crisis, the value of the notes was all but wiped out.

Justice Jagot found S&P rating analysts were "sandbagged" by ABN AMRO into awarding the top investment ranking to the product to make it more appealing to investors.

Court documents show S&P debated whether the CPDO was worth a AAA rating.

"You are the wuss for bending over in front of bankers and taking it... you rate something AAA, when it is really A-? You proud of that little mistake?" wrote Sebastian Venus to Derek Ding in May 2007.

Standard & Poor's is also being sued by 90 local councils, churches and charities for rating toxic mortgage bonds sold by the collapsed investment bank, Lehman Brothers, as AAA.