The Court of Appeal’s recent decision is another blow for litigants who hope that foreign law will allow them to escape from liability under English law contracts. This case, Dexia Crediop SpA v Comune di Prato  EWCA Civ 428 (15 June 2017) arose from a claim by Dexia (the Bank) for some EUR 6.5 million due under an interest rate swap. The contract was subject to English law and jurisdiction.
The defendant, an Italian local authority (Prato), sought to rely on various Italian law arguments. Not one arrow in Prato’s “capacious quiver” of defences struck home, however. The result of Walker J’s judgments was basically reversed.
Earlier this year (see my March post), Blair J held that Lisbon based transport companies could not use “mandatory” provisions of Portuguese law to defeat a multi-million Euro claim by Santander under interest rate swaps contracts. The Court of Appeal has now upheld this decision in Banco Santander Totta SA v Cia Carris de Ferro de Lisboa SA  EWCA Civ 1267 (main judgment, Sir Terrance Etherton MR).
In short, under article 3(3) of the Rome Convention, a “mandatory” provision of national law could only displace the parties’ express choice of law in a contract if the situation is truly domestic – an “international situation” (even if not pointing to a specific other country) is sufficient to prevent article 3(3) applying. Continue reading →
This case (Banco Santander Totta SA v Companhia de Carris de Ferro de Lisboa SA  EWHC 465 (Comm)), arises from a number of complex swap contracts under which, by October 2015, some EUR 272 million were due but not paid.
In his judgment on 4 March 2016, among other things, Blair J decided that Article 3(3) of the Rome Convention  could not be used to displace a contractual choice of English law with certain mandatory provisions of Portuguese law even where both contracting parties were Portuguese. Had he held otherwise, Portuguese law might have provided a complete defence to payment. Blair J’s decision was clearly influenced by the desirability of legal certainty in major financial transactions and upholding party autonomy.
Blair J’s decision is notable because his conclusion is at odds with that of Walker J in a similar case involving Italian parties (Dexia Crediop SpA v Comune di Prato  EWHC 1746 (Comm)). Continue reading →