BNP Paribas S.A. v Trattamento Rifiuti Metropolitani S.P.A.
| Jurisdiction | England & Wales |
| Judge | Lord Justice Hamblen,Lord Justice Flaux,Lady Justice Asplin |
| Judgment Date | 07 May 2019 |
| Neutral Citation | [2019] EWCA Civ 768 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A4/2018/1850 |
| Date | 07 May 2019 |
[2019] EWCA Civ 768
Lord Justice Hamblen
Lord Justice Flaux
and
Lady Justice Asplin
Case No: A4/2018/1850
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
THE BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
The Honourable Mr Justice Robin Knowles CBE
Royal Courts of Justice
Strand, London, WC2A 2LL
Adrian Beltrami QC and Christopher Bond (instructed by Allen & Overy LLP) for the Claimant/Respondent
Charles Samek QC and James Bickford Smith (instructed by Collyer Bristow LLP) for the Defendant/Appellant
Hearing dates: 9/10 April 2019
Approved Judgment
Introduction
This appeal concerns apparently competing jurisdiction clauses.
Trattamento Rifiuti Metropolitani S.P.A. (‘TRM’) appeals against the judgment of Knowles J dated 17 July 2018 whereby he refused TRM's application to dismiss for want of jurisdiction the claim of BNP Paribas S.A. (‘BNPP’), issued on 23 September 2016 and served on 10 March 2017 (‘the Claim’).
The issue raised on the appeal is whether the judge was correct to conclude that the claims for declaratory relief sought in the Claim fall within an English jurisdiction clause (‘the EJC’) contained in a swap transaction between the parties and not within an Italian jurisdiction clause (‘the IJC’) contained in a financing agreement between them.
TRM contends that declarations sought in the Claim fall within the IJC in favour of the courts of Turin in a financing agreement entered into between a syndicate of banks, including BNPP in its capacity as “Mandated Lead Arranger, Lending Bank and Agent Bank”, and TRM on 29 October 2008, as subsequently amended (‘the FA’). TRM has issued a claim against BNPP in Turin on 14 April 2017 (after service of the Claim) (‘the Italian Claim’). The Italian Claim makes claims in respect of alleged breaches by BNPP of the FA and of various alleged advisory obligations.
The Claim is for negative declaratory relief in respect of an interest rate hedging transaction entered into on ISDA Master Agreement terms between BNPP, in its capacity as “Hedging Bank”, and TRM in March 2010 (‘the Swap’ or ‘the Transaction’). The Swap documentation contains the EJC. The judge held that BNPP has much the better of the argument that the Claim falls within the EJC and that it must therefore be heard in England, pursuant to Article 25 of Regulation (EU) No. 1215/2012 of 12 December 2012 (‘the Regulation’ and ‘Article 25’).
Factual background
TRM is a project company incorporated in Italy. BNPP is an international bank, headquartered in Paris, with branches in London and Milan, among other places.
In July 2005, TRM received a concession from the Province of Turin to design, build and operate a power plant in Gerbido, Italy (‘the Project’). TRM sought to appoint a financial advisor for the Project by way of a call for tenders dated 23 January 2006.
On 6 July 2006, TRM entered into a financial advisory contract with a consortium of companies led by Banca OPI SpA (‘the FAC’). BNPP was not a party to or otherwise involved in the FAC.
In January 2007, pursuant to the FAC, TRM received a preliminary information memorandum (‘the PIM’), with recommendations for TRM's financing needs for the Project and to which was appended a preliminary term sheet setting out proposed terms and conditions for the project financing (‘the PTS’). On 17 May 2007, TRM initiated a tendering process for financing the Project, and, on 31 October 2007, BNPP was one of ten banks that received an invitation to tender (‘the Call for Tender’). The Call for Tender referred to a further document, the Notes on Tender, which itself referred to the PIM and PTS.
BNPP made a tender expressed by reference to its Technical Offer, among other documents. TRM submits that BNPP's Technical Offer dated 23 November 2007 outlined a range of activities that it would undertake on TRM's behalf including designing, advising on and implementing the financing structure for the Project. Those activities included “provision for alternatives for hedging against the risk of interest rate fluctuation and, in accordance with TRM, subsequent definition of the definitive hedging coverage”. In the Technical Offer BNPP stated that “with regard to TRM, BNPP … will be able to act as a single reference point for all the activities described … which will be carried out entirely by its Italian branch”.
TRM's case is that BNPP's agreement, if it won the tender, to act as “single reference point” entailed an assumption of roles and responsibilities which gave rise to significant legal duties on BNPP under Italian law.
BNPP won the tender on 19 December 2007.
The FA was entered into on 29 October 2008 between TRM and a syndicate of lenders, led by BNPP. BNPP was party to the FA through its Milan branch as “Mandated Lead Arranger, Lending Bank and Agent Bank”. The FA defines BNPP as “Hedging Bank” for the purpose of interest-rate hedging arrangements, but BNPP is not party to the FA in that capacity.
The FA is governed by Italian law. Article 28.2 is the IJC and provides:
“Any dispute relating to the interpretation, conclusion, performance or termination of this contract or otherwise relating to it shall be within the exclusive competence of the Court of Turin”.
Under the FA, TRM was to pay a floating interest rate against which interest rate hedging contracts were to be made. In the FA, the Hedging Bank is defined as “[BNPP] in its capacity as counterparty of [TRM] within the meaning of the Tender Documents and Hedging Contracts” (Article 1.2). Article 17.19 provides that “[TRM] is committed to sign the Hedging Contracts in accordance with the Strategy of Hedging”. The Strategy of Hedging is defined as “the hedging strategy intended to cover the risk of fluctuation of interest on the Loan, as more fully described in Appendix 17.19”. Appendix 17.19 to the FA provides as follows:
“1. [TRM] must conclude and maintain derivatives contracts covering the risk arising from interest rate fluctuations on 100% of the total amount disbursed from time to time and not reimbursed under the Base Lines (“Hedging Contracts”) from the first Date of Use indicated in the Financing Contract until the Final Expiry date of the Base Lines.
2. [TRM] must conclude Hedging Contracts exclusively with [BNPP] in its capacity as a Hedging Bank.
3. Hedging Contracts shall be concluded by [signing] the relative standard documentation as published from time to time by the International Swaps and Derivatives Association, Inc. (“ISDA”) and shall refer to the 1992 ISDA definitions.
4. Except in the case of Hedging Contracts, [TRM] may not enter into any sort of agreement which constitutes a derivative contract.”
On 30 January 2013, Article 17.19 was subsequently amended to include the following, further obligation on TRM:
“…to comply with its undertakings under the Hedging Contracts and to abstain from perfecting transactions of any kind whatsoever on financial instruments different from the Hedging Contracts”.
On 29 October 2008, BNPP and other lenders entered into an Intercreditor Agreement (‘the ICA’). As with the FA, BNPP was party to the ICA through its Italian branch as “Mandated Lead Arranger, Lending Bank and Agent Bank”. BNPP was, however, also party to the ICA through its Paris office as “Hedging Bank”. The ICA is governed by Italian law, with an exclusive jurisdiction clause in favour of the Courts of Milan, later amended to Turin TRM submits.
In fulfilment of its interest rate hedging obligations to the lenders under the FA, TRM entered into the Swap on 23 March 2010. The Swap documents comprise a 1992 ISDA Master Agreement dated 1 March 2010 (‘the ISDA Master’) and the Schedule thereto (‘the Schedule’), and a final Confirmation dated 23 March 2010 (together, ‘the Transaction Documents’). The Transaction Documents include the representations relied on by BNPP in the Claim. They were amended, and the representations repeated, on 9 October 2015. BNPP was counterparty to the Swap in its capacity as “Hedging Bank” and through its central office in Paris.
The ISDA Master provides that:
“Section 1(b) — In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail.
Section 13 — Governing Law and Jurisdiction … (b) – With respect to any suit, action or proceedings relating to this Agreement …, each party irrevocably: — submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed by English law …” (as it was).
The Schedule contains the following provisions:
“Notwithstanding anything to the contrary contained herein, this Agreement is entered into in connection with the loan agreement dated October 29th, 2008, as subsequently amended by the Atto Modificativo del Contratto di Finaziamento (sic) dated January 21st, 2010 [ie. the FA]… and the relevant intercreditor agreement dated as of January 21st, 2010 [ie. the ICA]….
For the purpose of this Agreement, the parties acknowledge the existence of the [FA] and the [ICA] and further acknowledge that (i) their respective rights under this Agreement are subject to the terms and conditions of the [FA] and the [ICA]; (ii) that BNPP is the ‘Banca Hedging’ (ie. the bank that will provide the ‘Contratti di Hedging’ pursuant to the ‘Strategia di Hedging’ as these terms are defined in paragraph 1 (Interpretazione) and annex 17.19 (Strategia di Hedging) of the [FA] and (iii) no derivative transactions shall be entered into hereunder other than those foreseen in annex 17.19 (Strategia di Hedging) of the [FA]…
…In the case of conflict between the provisions of...
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