Bank succeeds in jurisdiction dispute under the ISDA Master Agreement

On 2 July 2018, Mr Justice Robin Knowles CBE handed down judgment in BNP Paribas SA v Trattamento Rifiuti Metropolitani SpA [2018] EWHC 1670 (Comm), refusing the defendant’s application to dismiss the claim against it for want of jurisdiction. This decision is one of a series of recent judgments in the Commercial Court concerning the correct approach to allocating jurisdiction where a bank relies upon the English jurisdiction provision in the standard-form ISDA Master Agreement, while its customer seeks to rely on a foreign jurisdiction clause in a different agreement.

In 2008, the defendant, an Italian public-private partnership, entered into a loan agreement with a syndicate of banks, led by the claimant, to fund the building of an energy plant near Turin. The loan agreement contained an exclusive jurisdiction clause in favour of the Court of Turn. In 2010, the defendant subsequently entered into an interest-rate swap with the claimant pursuant to an ISDA Master Agreement in Multi-Currency Cross Border form.  The Master Agreement contained an exclusive jurisdiction clause in favour of the English courts.

In 2016, a dispute arose over the swap, and the bank issued a Claim Form in the Commercial Court seeking declarations of non-liability based on the express terms of the Master Agreement. The defendant subsequently brought proceedings in Italy and challenged jurisdiction in England on the ground that the dispute was not concerned with the swap per se, but in fact with alleged breaches of the loan agreement and other obligations subject to the jurisdiction of the Court of Turin.

After a 3-day hearing, the Commercial Court found that the bank had much the better of the argument on jurisdiction. The Court emphasised the importance of commercial certainty in the construction of the ISDA jurisdiction clause and rejected the argument that the subsequent Italian proceedings should form part of its analysis of whether the declarations sought fell within that clause.

Adrian Beltrami QC and Christopher Bond acted for the successful bank, instructed by Allen & Overy LLP.

The judgment may be found here.

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