Dexia Crediop S.P.A. v Provincia Di Brescia
| Jurisdiction | England & Wales |
| Judge | Ali Malek,Mr Ali Malek |
| Judgment Date | 21 December 2016 |
| Neutral Citation | [2016] EWHC 3261 (Comm) |
| Docket Number | Case No: CL-2016-000244 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 21 December 2016 |
[2016] EWHC 3261 (Comm)
Ali Malek QC
(SITTING AS A DEPUTY HIGH COURT JUDGE)
Case No: CL-2016-000244
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
Fetter Lane, London EC4A 1NL
Daniel Toledano QC and Conall Patton (instructed by Slaughter and May) for the Claimant
Charles Samek QC and Craig Ulyatt (instructed by Withers LLP) for the Defendant
Hearing dates: 6–7 December 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 as handed down may be treated as authentic.
Ali Malek QC
Mr Ali Malek QC (sitting as a Deputy High Court Judge):
(1) Introduction
In its Claim Form dated 21 April 2016 the Claimant (" Dexia") seeks declaratory and other relief in relation to interest rate swaps entered into with the Defendant (" Brescia") in June and December 2006.
In its Application Notice issued on 26 July 2016, Brescia disputes the Court's jurisdiction under CPR Part 11 in relation to the second and third declarations sought by Dexia (Declarations(2) and (3)). The terms of the declarations are as follows:
"(2) Such execution, delivery and performance do not violate or conflict with any law applicable to the Defendant, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets;
(3) The Transactions were entered into in conformity with Decree No. 389 of 1 December 2003 issued by the Treasury Department of the Ministry of Economy and Finance and the Ministry of Interior and published in the Official Gazette No. 28 of 4 February 2004 and Article 41 Law No. 448 of 28 December 2001, Article 21 of Legislative Decree No. 58 of 24 February 1998 and Articles 27 to 30 of Consob Regulation No. 11522 of 1 July 1998 (in force at the time the Transactions were entered into), and all relevant Italian laws and regulations, to the extent they are applicable to the Transactions;"
In short, Brescia contends as follows:
i) First, as its primary case, that the dealings between the parties were governed by two separate but related contracts, a Mandate providing for the provision of various evaluation, structuring and organisation services by Dexia (which includes an exclusive jurisdiction clause in favour of the Court of Rome) and an ISDA Master Agreement governing the terms of two swaps transactions (which includes an exclusive jurisdiction clause in favour of the English courts). The issues which are the subject matter of Declarations (2) and (3), whether the Italian statutory provisions referred to were complied with, relate to the express obligations of Dexia contained in the Mandate. They are, therefore, subject to the exclusive jurisdiction clause in the Mandate in favour of the Court of Rome.
ii) Secondly, if the Court rejects its primary case and concludes that the issues which are the subject matter of Declarations (2) and (3) relate both to the Mandate and the ISDA Master Agreement and so fall within both jurisdiction clauses, then the English Court is required under Article 29(1) of Regulation (EU) No 1215/2012 (" the Recast Regulation") to stay its proceedings until such time as the Court of Rome, which was first seised, establishes its jurisdiction.
Dexia disputes both contentions. Its position can be summarised as follows:
i) First, it contends that the Brescia is unable to dispute the jurisdiction of the Court. It argues that Brescia has accepted the jurisdiction of the English Court to determine all declarations sought by Dexia and therefore it is unable to separate out Declarations (2) and (3) from the other declarations sought by Dexia.
ii) Secondly, it contends that all the declaratory relief sought in the Claim Form falls within exclusive jurisdiction clause of the ISDA Master Agreement in favour of the English Court. The declarations derive from representations and terms agreed by the parties in the ISDA Master Agreement.
iii) Thirdly, it contends that Brescia cannot rely on Article 29 of the Recast Regulation because the proceedings in England and Italy do not " involve the same cause of action". It also says that the English Court has exclusive jurisdiction in respect of the declarations sought in the English Proceedings and therefore there should be no stay in favour of the Court of Rome.
From this brief summary it is apparent that there are 3 issues for my determination:
i) First, whether Brescia is precluded from disputing the jurisdiction of the Court in relation to Declarations (2) and (3) (Issue 1).
ii) Secondly, whether the Court has jurisdiction in relation to Declarations (2) and (3) (Issue 2).
iii) Thirdly, whether the claims in respect of Declarations (2) and (3) should be stayed until the jurisdiction of the Court of Rome is established (Issue 3).
A further issue emerged during the oral submissions before me. Brescia indicated that it wished to amend its Application Notice to claim as a further alternative a stay of proceedings under Article 30(1) of the Recast Regulation. The possibility of making an application for a stay (whether under Article 30 or the Court's general powers of case management) was mentioned in Ms Polycarpou's third witness statement dated 5 December 2016 but was not relied upon in the Application Notice. On the second day of the hearing I was provided with an Amended Application Notice raising Article 30(1) as well written submissions in support.
Dexia opposed the application to amend. It contended that it would be prejudiced if I decided that matter now on the basis of materials before me. This is because it wished to introduce evidence that was relevant to the issue of whether a stay should be granted.
I consider that there is force in Dexia's argument based on prejudice. Accordingly this judgment does not deal with Brescia's Article 30(1) application. At the end of the hearing, I indicated that I would rule on the issues raised in application and that on the hand down, the parties could make further submissions to me as to how the Article 30(1) application would be dealt with.
Brescia's application under CPR Part 11 was supported by three statements of Ms Eleni Polycarpou who is a Special Counsel and also the statement of Mr Ugo Privitera, an Associate-Avvocato. Both Ms Polycarpou and Mr Privitera are employed by Withers LLP (" Withers") who act for Brescia.
Dexia relies on the statement of Mr Giuseppe Massimiliano Danusso, a partner of BonelliErede Law Firm (" Bonelli"). Together with Slaughter and May, Bonelli has the conduct of this matter for Dexia.
The hearing before me took place on 6–7 December 2016. On 8 December 2016 the Court of Appeal gave judgment in Barclays Bank Plc v Ente Nazionale Di Previdenza Ed Assistenza Dei Medici E Degli Odontoiatri [2016] EWCA Civ 1261. I received short submissions from both parties on this decision.
I turn to the factual background. It is taken from the evidence and skeleton arguments submitted for the purposes of the hearing. Some aspects of the background are or may be in dispute. It is not necessary for me to express any views about the underlying merits of the claims and allegations that the parties have made against each other.
(2) Factual Background
Brescia is the local authority for the province of Brescia within the administrative region of Lombardy in northern Italy.
Dexia is an Italian bank which specialises in the provision of financial services to Italian public authorities.
As at December 2005 Brescia had some 188 loans with Cassa Depositi e Prestiti SpA ("Cassa DP"), of which 170 were subject to fixed interest rates and 18 were subject to variable interest rates (" the Cassa DP Loans"). The total value of the Cassa DP Loans was approximately €84 million. As the 6 Month Euribor had fallen sharply since 1997, the applicable fixed interest rates were considerably higher than prevailing market rates and Brescia decided to explore the possibility of refinancing with a view to reducing its interest costs. Accordingly, in November 2005 two resolutions were passed, namely resolution 542 by Brescia's Provincial Committee and resolution 43 by Brescia's Provincial Council, authorising a request for non-binding quotations from Cassa DP for the repayment of the Cassa DP Loans so that the financial feasibility of early repayment could be assessed.
Brescia had had previous dealings with Dexia, which became a natural point of contact for financing issues. As a result, in March 2006 Dexia sent Brescia a document entitled " First Feasibility Study on Active Debt Management" which set out detailed proposals for Brescia to restructure its debt through a bond issue and an associated interest rate swap ( "the Feasibility Study").
Brescia passed various resolutions clearing the way to proceed with a restructuring. In particular:
i) On 2 May 2006 Brescia's Provincial Committee passed Resolution number 203 specifying that Brescia's 2006 executive management plan included the objective of minimising the cost of financial obligations by refinancing the Cassa DP Loans through a bond issue.
ii) On 24 May 2006 Brescia's Provincial Council passed resolution 271 delegating responsibility for identifying banks on which to confer a mandate for active management of Brescia's debt and liquidity to Brescia's Director of Financial Services, Dr Dario Fenaroli (" Dr Fenaroli").
iii) On 29 May 2006, Brescia's Provincial Council passed Resolution number 16 deciding to make an early repayment request to Cassa DP. On the same day, Dr Fenaroli passed Executive Resolution...
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