Dexia Crediop S.p.A. v Comune di Prato
| Jurisdiction | England & Wales |
| Judge | The Hon Mr Justice Walker |
| Judgment Date | 10 November 2016 |
| Neutral Citation | [2016] EWHC 2824 (Comm) |
| Docket Number | Case No: CL-2010-000481 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 10 November 2016 |
[2016] EWHC 2824 (Comm)
Mr Justice Walker
Case No: CL-2010-000481
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Rolls Building
Fetter Lane
London EC4A 1NL
Richard Handyside QC & Rupert Allen (instructed by Allen & Overy) for the Claimant
Jonathan Davies Jones QC & Christopher Burdin (instructed by Seddons) for the Defendant
Hearing date, in addition to dates listed in the main claim judgment: 23 October 2015 Subsequent written submissions were received during the period 6 to 24 November 2015 and 18 to 21 July 2016.
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this judgment and that copies of this version may be treated as authentic.
Paul Walker, 10 November 2016
[Table of Contents]
| A. Introduction | 3 |
| B. Dexia's alternative claims | 5 |
| B1. Dexia's alternative claims: introduction | 5 |
| B2. Restitution claim: proper law | 5 |
| B2.1 Restitution claim — proper law: introduction | 5 |
| B2.2 Restitution claim: the Italian law objection | 6 |
| B2.3 Validity of the reasoning in the Italian law objection | 13 |
| B3. Restitution claim: time bar | 14 |
| B3.1 Restitution claim – time bar: introduction | 14 |
| B3.2 Restitution claim – time bar: accrual of the cause of action | 15 |
| B3.3 Restitution claim – time bar: relief from mistake | 16 |
| B4. Restitution claim: change of position | 19 |
| B4.1 Restitution claim – change of position: introduction | 19 |
| B4.2 Restitution claim — change of position: analysis | 20 |
| C. Other financial services & civil law defences | 23 |
| C1. Italian financial services & civil law: introduction | 23 |
| C2. Did art 32 TUF apply, engaging art 30.6 and 30.7? | 25 |
| C3. Article 23.1 TUF & article 30 CR | 27 |
| C4. CC provisions dealing with "causa" and "oggetto" | 32 |
| C5. "Causa": did the swaps meet Italian law requirements? | 33 |
| C5.1 "Causa": introduction | 33 |
| C5.2 "Causa": breaches of Italian law | 34 |
| C5.3 "Causa": non-disclosure of MTM | 35 |
| C5.4 "Causa": speculative contracts | 41 |
| C5.5 "Causa": conclusions | 42 |
| C6. "Oggetto": did the swaps meet Italian law requirements? | 42 |
| C7. "Causa" & "oggetto": Article 3 non-derogable rules? | 43 |
| D. Prato's remaining defences | 43 |
| E. Prato's restitution counterclaim | 44 |
| E1. Prato's restitution counterclaim: introduction | 44 |
| E2. Restitution counterclaim: proper law | 44 |
| E3. Restitution counterclaim: change of position | 48 |
| F. Regulatory counterclaim | 48 |
| F1. Regulatory counterclaim: introduction | 48 |
| F1.1 The regulatory assertions | 48 |
| F1.2 Structure of this section & overlap with section G | 49 |
| F1.3 Regulatory counterclaim: legislative provisions | 49 |
| F1.4 Regulatory counterclaim: common ground | 53 |
| F1.5 Prato's Hidden Costs explanation | 55 |
| F1.6 Significance of initial MTM: Prato's propositions | 57 |
| F1.7 Other aspects of MTM urged by the parties | 67 |
| F2. Regulatory counterclaim: non-disclosure assertions | 70 |
| F2.1 Non-disclosure: introduction | 70 |
| F2.2 Non-disclosure: significance of 2009 changes | 71 |
| F2.3 Non-disclosure – art 28.2 CR: agreed propositions of law | 73 |
| F2.4 Non-disclosure – art 28.2 CR: Prato's cases | 75 |
| F2.5 Non-disclosure – art 28.2 CR: Dexia's cases | 85 |
| F2.6 Non-disclosure – art 28.2 CR: analysis | 90 |
| F2.7 Non-disclosure: articles 32.5, 36 and 61.1 g)CR | 92 |
| F2.8 Non-disclosure assertions: conclusion | 95 |
| F3. Regulatory counterclaim: structuring assertions | 95 |
| F4. Regulatory counterclaim: unsuitability assertions | 98 |
| F5. Regulatory counterclaim: right to withdraw assertions | 98 |
| F6. Regulatory counterclaim: conflict assertions | 98 |
| F7. Regulatory counterclaim: causation and damages | 102 |
| G. Advisory & misrepresentation counterclaims | 105 |
| G1. Advisory counterclaim | 105 |
| G1.1 Advisory counterclaim: introduction | 105 |
| G1.2 Advisory counterclaim: what does it add? | 107 |
| G1.3 Advisory counterclaim: other matters | 110 |
| G2. The misrepresentation counterclaim & defence | 110 |
| H. Concluding matters | 111 |
| Annex 1: abbreviations and short forms | 112 |
| Annex 2A: Dr Faro's evidence | 132 |
| Annex 2B: what would Prato have done? | 142 |
| Annex 3: extracts from Annex 3, CR | 149 |
A. Introduction
My judgment dated 25 June 2015 dealt with local government law defences and financial services law defences to the main claim in these proceedings. I shall refer to it as "the main claim judgment" or "MCJ". The present judgment is concerned with issues not dealt with in the main claim judgment. Where convenient, I shall refer to the present judgment as "the judgment on remaining issues" or "JORI".
In the present judgment I adopt the short forms used in the main claim judgment. There is one exception. In the main claim judgment I used "Consob 11522/1998" to refer to regulation 11522 made by Consob on 1 July 1998. In the present judgment I use a shorter abbreviation: "CR". For ease of reference, Annex 1 to the present judgment sets out abbreviations and short forms used in the main claim judgment, and those used in the present judgment, along with the corresponding long form and notes.
An overview of the case will be found in section A1 of the main claim judgment. As to the structure of that judgment:
(1) sections A2, A3 and A4 of the main claim judgment describe the written evidence relied on by the parties, the course of the trial, market concepts concerning types of interest rate swap, the use of the expression "mark to market" or "MTM", and the use of terms "hidden" or "implicit" costs;
(2) section B describes key features of the background and history, and section C describes some general aspects of Italian law along with English law's approach to Italian law;
(3) in section D defences asserting contravention of Italian local government law are examined, and reasons are given for concluding that none of the defences in this category succeeds;
(4) in section E certain aspects of defences asserting contravention of Italian financial services and civil law are examined, and reasons are given for concluding that one such defence, relying on article 30 TUF, succeeds;
(5) section F notes that Prato, for the reasons given in section E, has succeeded in defending the main claim; it adds that while it is unnecessary to consider other defences advanced by Prato, other defences will, to the extent appropriate, be considered in a further judgment;
(6) section G explained why my conclusion in section E gave rise to a need for further submissions in relation to Prato's counterclaim and Dexia's alternative claims;
(7) section H explained that I would hear oral submissions on the directions to be given in order to take the matter forward.
The directions contemplated in section H of the main claim judgment were given after hearing oral submissions on 25 June 2015. They resulted in written submissions in July 2015 and a hearing on 23 October 2015. There were further written submissions in November 2015 and July 2016.
The matters dealt with in the present judgment (and the outcome) are these. Section B below deals with Dexia's alternative claims. (I find that the alternative claim for restitution succeeds.) Turning to Prato's other defences, section C discusses those which rely on Italian financial services law (which succeed) and Italian concepts of causa and oggetto (which do not succeed). Section D makes some observations on Prato's other defences. Turning to Prato's counterclaims, section E deals with the restitution counterclaim (which succeeds). Section F deals with the regulatory counterclaim. (I find that allegations of breach are, save in one instance, not established. The one instance concerns an established breach of article 30.6 TUF, but I conclude that this breach caused Prato no loss. Accordingly no damages are awarded to Prato.) The advisory counterclaim and the misrepresentation counterclaim are discussed in section G. (Neither of those counterclaims succeeds.) Section H deals with concluding matters, including the set-off defence. (The set-off defence succeeds: it appears likely that the amount payable by Dexia to Prato under the restitution counterclaim will be greater than the amount payable by Prato to Dexia under the restitution claim, and after set-off a net sum only will be payable by Dexia to Prato.)
B. Dexia's alternative claims
B1. Dexia's alternative claims: introduction
Two alternative claims were advanced by Dexia. The first alternative claim was briefly described in paragraph 14 of the main claim judgment. It was that, if swap 6 were invalid or unenforceable, then there should be declaration that Prato is bound by the terms of swaps 3, 4 and 5, because in such circumstances they would not have been terminated pursuant to swap 6. Dexia now recognises that the main claim judgment has the consequence that there is no scope for this first alternative claim. The reasoning in the main claim judgment concerning article 30 TUF is just as much applicable to the earlier swaps as it is to swap 6. Applying that reasoning, Prato has by its defence validly invoked article 30.7 TUF in relation to all the earlier swaps. It follows that Dexia cannot rely on swaps 3, 4 and 5 in the way which is envisaged in the first alternative claim.
Dexia advances a second alternative claim. I shall call it "the restitution claim". As noted in paragraph 254 of the main claim judgment, it arises in relation to swap 1, swap 2, swap 4 and swap 5: if those swaps are invalid, Dexia seeks to recover the net differentials paid to Prato under those swaps. The total of these net differentials is €1,252,784.
In the remainder of this section I...
To continue reading
Request your trial
-
[1] Nissan Motor Company, Ltd [2] Nissan Middle East Fze v [1] Carlos Ghosn [2] Carole Nahas Ghosn [3] Beauty Yachts Pty Ltd
...at [23]. 26 (Civil Appeal No 26 of 2005) (unreported, delivered 18 th September 2006) (Barrow JA). 27 [2008] EWHC 2613 (Comm). 28 [2016] EWHC 2824 (Comm). 29 Reversed in part without consideration of this point: [2017] EWCA Civ 428. 30 For a close analogy see OJSC TNK-BP Holding v Lazuren......
-
Nissan Motor Company, Ltd v Carlos Ghosn
...at [23]. 26 (Civil Appeal No 26 of 2005) (unreported, delivered 18th September 2006) (Barrow JA). 27 [2008] EWHC 2613 (Comm). 28 [2016] EWHC 2824 (Comm). 29 Reversed in part without consideration of this point: [2017] EWCA Civ 428. 30 For a close analogy see OJSC TNK-BP Holding v Lazuren......
-
Banca Intesa Sanpaolo SPA v Comune Di Venezia
...in this case. 388 Applying the English common law test of “closest and most real connection”, Walker J in Dexia v Comune di Prato [2016] EWHC 2824 (Comm), [160]–[164] held (on very similar facts to the present case) that the restitutionary claim consequential on the invalidity of the swaps......
-
Banco Santander Totta SA (Respondent/Claimant) v Companhia Carris De Ferro De Lisboa SA and Others
...conflict of laws sense, I respectfully disagree with him. It is to be noted that in a subsequent judgment in the Dexia proceedings — [2016] EWHC 2824 (Comm) – Paul Walker J said (at [150]) that he was not taken to decisions and academic writing on Article 3 generally (although the TCs say t......