BNP Paribas SA v Trattamento Rifiuti Metropolitani SPA
Jurisdiction | England & Wales |
Judge | Mr Justice Robin Knowles |
Judgment Date | 02 July 2018 |
Neutral Citation | [2018] EWHC 1670 (Comm) |
Court | Queen's Bench Division (Commercial Court) |
Docket Number | Case No: CL-2016-000583 |
Date | 02 July 2018 |
[2018] EWHC 1670 (Comm)
Mr Justice Robin Knowles CBE
Case No: CL-2016-000583
IN THE HIGH COURT OF JUSTICE
THE BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Adrian Beltrami QC and Christopher Bond (instructed by Allen & Overy LLP) for the Claimant
Charles Samek QC and James Bickford Smith (instructed by Collyer Bristow LLP) for the Defendant
Hearing dates: 11–13 June 2018
Introduction
In these proceedings the claimant (“BNPP”) seeks a number of declarations from the Commercial Court in London. On the present application the court is asked by the defendant (“TRM”) to decide whether the English Court has jurisdiction.
TRM's argument on jurisdiction has, if correct, some wider significance. This is because the argument explores whether an express agreement to the jurisdiction of the English Court within standard form ISDA documentation should be displaced or restricted.
In broadest outline, TRM relies on an express agreement to Italian jurisdiction reached between the parties in another written contract, on an implied contract, and on a number of alleged matters of context. It also says there is no true dispute here.
The circumstances in summary
In 2005 the Province of Torino in Italy was concerned to develop capacity to convert waste into energy. It engaged TRM to design, build and operate a plant at Gerbido for this purpose.
The project required financing. TRM retained a number of companies to advise on financing, to include an interest rate hedging strategy.
An invitation to tender for the financing of the project followed. BNPP, a global bank headquartered in France, was one of ten banks to respond. It said 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”.
BNPP was ultimately successful in the tender, in 2007. In July 2008 it made proposals for interest rate hedging. A Financing Agreement for loan financing of Euro 413 million was entered into between TRM and a syndicate of banks led by BNPP in October 2008 and amended in 2010 (twice) and 2013.
The Financing Agreement provided for a “Hedging Strategy” “intended to cover the risk of fluctuation of interest on the Loan” and described as follows (by Appendix 17.19 to the Financing Agreement):
“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.”
It is TRM's case, as described to me by its Leading Counsel, Mr Charles Samek QC, that its “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”. Further, TRM contends that, by reason of provisions in the documents in the tender process and in the Financing Agreement “there was as a matter of Italian law an obligation on BNPP to implement the Hedging Strategy” under the Financing Agreement.
On 1 March 2010 TRM and BNPP entered into an ISDA Master Agreement in Multi Currency – Cross Border form, 1992 edition, with a Schedule. On 23 March 2010 the parties agreed an interest rate swap transaction with BNPP under the Master Agreement, entering into a Confirmation.
These transactions were preceded by a letter from BNPP which referred to “the Hedging Contracts to be signed between [TRM] and [BNPP] in its capacity as “Hedging bank” pursuant to and under the terms of paragraph 1 (Interpretation) and appendix 17.19 (Hedging Strategy) appended to” the Financing Agreement. TRM further draws attention to the following provision in the Schedule to the Master Agreement:
“Notwithstanding anything to the contrary contained herein, this Agreement is entered into in connection with [the Financing Agreement] and the relevant intercreditor agreement …
For the purpose of [the Master Agreement], the parties acknowledge the existence of the [Financing Agreement] and the [intercreditor agreement] and further acknowledge that (i) their respective rights under this Agreement are subject to the terms and conditions of the [Financing Agreement] and the [intercreditor agreement] (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 [Financing Agreement]) and (iii) no derivative transactions shall be entered into hereunder other than those foreseen in annex 17.19 (Strategia di Hedging) of the [Financing Agreement] …
In the case of conflict between the provisions of this Agreement and the [Financing Agreement] and the [intercreditor agreement], the provisions of the [Financing Agreement] and the [intercreditor agreement] as appropriate shall prevail.”
It appears that in amendments introduced in 2013 to the Financing Agreement Article 17.19 of the Financing Agreement was modified to include the wording “[TRM] is committed to … comply with its commitments under the Hedging Contracts …”.
The jurisdiction clauses
The Financing Agreement, expressed to be governed by Italian law, contains a jurisdiction clause in these terms:
“28.2 Competent Court
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.”
The Master Agreement contains a jurisdiction clause in these terms:
“13 Governing Law and Jurisdiction
…
(b) Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement (“Proceedings”), each party irrevocably:-
(i) submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed by English law …”
The Master Agreement was expressed to be governed by English law.
The proceedings
On 23 September 2016 BNPP commenced the present proceedings against TRM in the Commercial Court in London. On 14 April 2017 TRM commenced proceedings against BNPP in the Tribunale of Torino in Italy.
In the English proceedings, BNPP attached Brief Details of Claim to its Claim Form, taking the procedural option that would see Particulars of Claim follow if an acknowledgement of service was filed by TRM indicating an intention to defend the claim.
In paragraph 1 of the Brief Details of Claim, BNPP states that its claims “are for declarations in connection with a financial transaction pursuant to which [TRM] entered into interest rate hedging arrangements with the Claimant (the “Transaction”)”. Mr Samek QC argued that this language was “apt to include” the Financing Agreement, and referred to correspondence in support of this argument.
In my view, when read in context, it is sufficiently clear that the language refers only to the Master Agreement and the swap transaction entered into under that. Paragraph 3 of the Brief Details of Claim states that “the terms governing the Transaction” are contained in the ISDA Master Agreement, the Schedule and the Confirmation, defining these (alone) as “the Transaction Documents”. Paragraph 5 refers to an irrevocable submission by the parties to the jurisdiction of the English courts, and that is to be found in the Master Agreement and not in the Financing Agreement. The Financing Agreement is separately defined under paragraph 6 of the Brief Details of Claim, as an agreement “in connection with which the Transaction was concluded”.
The principal remedies sought in the English proceedings are declarations. These are sought in the terms set out in Appendix A.
As for the Italian proceedings, TRM states that these “are concerned not with the … (Swap) per se, but inter alia with whether the Hedging Strategy was properly implemented”. It says that:
“[i]n summary, the claims of TRM against BNPP relate to:
a. breach of [the Financing Agreement] and of [an] implied advisorship contract … which TRM alleges was entered into by the parties upon the award of the public tender called by TRM; and,
b. breach of the advisory obligations undertaken by BNPP under the [Financing Agreement], the Tender Documents (as defined …) and the offer for financial services made by BNPP on 25 July 2008 and accepted by TRM on 18 March 2009;
c. violation by BNPP of Article 21 of the Italian Legislative Decree 58 of 24 February 1998 (Consolidated law on financial markets and investment services) and to the declaration of the pre-contractual and non-contractual [i.e. tort/ delict] liability deriving from such violation;
d. violation by BNPP of [a] general duty to act in good faith and to the declaration of the non-contractual liability deriving from such violation; and,
e. indemnification of the damages suffered by TRM due to the breaches of contracts and pre- and non-contractual violations mentioned under (a) to (d) above.”
It bears emphasis that I am not concerned with the Italian proceedings. I am concerned only with...
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