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

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

Avoiding enforcement of default judgment: Vizcaya Partners Ltd v Picard [2016] UKPC 5

In its advice delivered today on appeal from the Gibraltar Court of Appeal, the Privy Council examines when a judgment debtor will be regarded as having agreed to the jurisdiction of a foreign court (in advance rather than by appearance) so that a foreign default judgment may be enforced against him in another jurisdiction (in this case Gibraltar).  The Board’s advice also provides a convenient summary of the role of experts on foreign law.

The Board’s advice is given by Lord Collins (editor of the leading text Dicey, Morris and Collins on the Conflict of Laws).  It examines a great deal of apparently conflicting previous authority. It is therefore not surprising that the Board considered the case so important that it has delivered its advice notwithstanding the settlement, post hearing, of the underlying dispute.

The conclusion reached is that an agreement to submit to the foreign court’s jurisdiction may be implied. Continue reading