Italian law is no way out of swap liability for Prato

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 [2017] 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.[1]  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” [2] of defences struck home, however.  The result of Walker J’s judgments[3] was basically reversed.

The case demonstrates how hard it is to show that “mandatory” rules of foreign law should apply (due to Article 3(3) of the Rome Convention) where parties have expressly chosen English law.  The 2016 Banco Santander case[4] (discussed in my post on Blair J’s March judgment and the Court of Appeal’s December decision) covered similar ground but this case is more extreme.  Continue reading

Asymmetric result?

The Commercial Court finds that asymmetric jurisdiction clauses are valid exclusive jurisdiction clauses for the purposes of the Brussels Recast. Given their prevalence in financial contracts,  a contrary decision could have produced significant instability.

Commerzbank Aktiengesellschaft v Pauline Shipping and Liquimar Tankers  [2017] EWHC 161 Continue reading

Court agrees with Deutsche Bank – Singapore is not more convenient

An alleged fraud (relating to a sale of Indian cotton) between an Indian, a Malaysian and a Hong Kong company has generated multiple claims in Singapore and one in London, Detusche Bank AG v CIMB Bank Berhad.  These arise from the typical web of letters of credit, finance facilities and guarantees found in international commodities finance.   In London, Deutsche Bank (DB) claim reimbursement from CIMB (a Malaysian bank) of sums paid out under letters of credit issued by CIMB.

Of interest for this blog is the Commercial Court’s decision last week ([2017] EWHC 81 (Comm)) refusing to grant CIMB a stay of the London proceedings on the basis of forum non conveniens.  Teare J’s judgment is a pithy demonstration of the English court’s approach to such arguments applying the Spiliada[1] principles (discussed below).

A key point to note is that the mere risk of inconsistent decisions on a factual point and the duplication of costs was not enough to justify a stay of English proceedings.  The case also should give parties pause to consider before beginning parallel proceedings in another jurisdiction (see my final thoughts on tactics)

20 Essex Street’s Andrew Fulton appeared for Deutsche Bank. Continue reading

Court of Appeal confirms that Portuguese “mandatory” law is no defence to swaps liability

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 [2016] 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

Waived forum non conveniens? A claim could still be stayed…

Last week, in Standard Chartered Bank (Hong Kong) Ltd v Independent Power Tanzania Ltd [2016] EWCA Civ 411, the Court of Appeal (judgment by Longmore LJ) allowed English proceedings to continue in parallel with Tanzanian proceedings involving the same parties and issues.

The case is of particular interest because the contracts included both a non-exclusive jurisdiction clause and a forum non conveniens (FNC) waiver clause (i.e. a clause by which each party irrevocably waived, among other things, any claim it might otherwise make that proceedings had been brought in “an inconvenient forum”).

The combination of those clauses ought severely to restrict the possibility of one party resisting proceedings on jurisdictional grounds.  On the other hand, the Court of Appeal’s decision in this case makes clear that such clauses cannot always prevent parallel proceedings being used to justify a stay of English proceedings, at least on case management grounds.

In general, though, non-exclusive jurisdiction clauses and FNC waiver clauses give rise to a real risk of parallel proceedings.  When deciding whether to include these types of clauses in a contract, this risk needs to be weighed carefully against the benefit of a choice of jurisdictions.

In addition, the court’s treatment of an abuse of process argument (not dependent on the jurisdiction clause points) provides a helpful outline of the relevant principles. Continue reading

Limited scope for the application of Portuguese mandatory rules: Banco Santander Totta SA

This case (Banco Santander Totta SA v Companhia de Carris de Ferro de Lisboa SA [2016] 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 [1] 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 [2015] EWHC 1746 (Comm)). Continue reading

Crescendo Maritime Co v Bank of Communications Company Ltd [2015] EWHC 3364 (Comm)

In his judgment of 25 November 2015, Teare J showed the Commercial Court’s willingness to use anti-suit injunctions to restrain foreign proceedings brought by a party to an arbitration agreement. This was tempered, however, by his refusal to maintain an anti-suit injunction to restrain proceedings brought by a non-party to the arbitration agreement but which the applicant said would undermine the effect of the arbitration award.

The case was triggered by the decision of a London arbitral tribunal deciding rights of parties to a guarantee to join the security assignee of that guarantee to proceedings.   This prompted one party to the original arbitration to bring proceedings against both other parties in China.  The existence of such security assignments is commonplace; the joinder of such assignees to arbitrations is less common. Continue reading

Anchor does not outweigh exclusive jurisdiction clause: Jong v HSBC (Monaco) [2015] EWCA Civ 1057

Yesterday’s Court of Appeal decision under the common law rules is a useful reminder that merely bringing a claim against an English domiciled defendant (who may unquestionably be sued in England) will not always be sufficient to persuade the court that it should exercise its jurisdiction over a foreign domiciled defendant in a related claim. This is particularly so where the foreign defendant and the claimant are party to an exclusive jurisdiction clause in favour of another court.

The courts were clearly influenced by the fact that the claim against the foreign defendant was “the most important of the claims” while “it is difficult to see what practical advantage Mrs Jong would gain by suing the two English … companies.”  Continue reading

A torpedo misses: Barclays Bank plc v Ente Nazionale di Previdenza [2015] EWHC 2857 (Comm)

This Commercial Court decision of 9 October 2015 makes it clear that attempts to circumvent exclusive jurisdiction agreements in favour of the English courts by bringing related actions in other EU member states are unlikely to succeed.  It also demonstrates the court’s willingness to award damages for breach of a jurisdiction clause.

Thus, although the defendant Italian pension fund (ENPAM) had brought antecedent claims in Italy against the claimant bank (Barclays), Blair J declined to stay the English proceedings under either article 27 or 28 of Regulation 44/2001 (Brussels I).  Blair J also gave summary judgment to Barclays on most of its claim for damages for breach of the exclusive jurisdiction clause. Continue reading