Success in the Court of Appeal on jurisdiction dispute

On 7 May 2019, the Court of Appeal handed down judgment in BNP Paribas SA v Trattamento Rifiuti Metropolitani SpA ([2019] EWCA Civ 768), unanimously dismissing the defendant’s appeal against the Order of Mr Justice Robin Knowles CBE refusing its application to dismiss the claim against it for want of jurisdiction ([2018] EWHC 1670 (Comm)).

This decision is one of a series of recent judgments in the Commercial Court and Court of Appeal 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 2-day hearing, the Court of Appeal upheld the Judge’s reasoning and conclusions to find that the bank had much the better of the argument on jurisdiction. The Court emphasised the importance of commercial certainty and predictability 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.

The Court also gave guidance on the proper role of foreign law experts in relation to issues of contractual interpretation, confirming that their evidence was confined to identifying the rules of interpretation under foreign law for the English court to apply, rather than expressing opinions as to what the contract means.

A link to the Court of Appeal’s judgment may be found here.

   

Adrian Beltrami QC and Christopher Bond acted for the successful bank in the Court of Appeal and at first instance, instructed by Allen & Overy LLP.