Dexia Crédit Local S.A. v Patrimonio del Trentino S.p.A.

Hearing date: 16 October 2024

Approved Judgment

This judgment was handed down remotely at 2:00pm on Friday 25 October 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

A. INTRODUCTION

The subject of the application before me is the challenge to this Court's jurisdiction (“the Jurisdiction Application”) by Patrimonio del Trentino S.p.A. (“Trentino”/the “Defendant”), the defendant to the claim in this action which was issued on 27 November 2023 by Dexia Crédit Local S.A. (“Dexia”/the “Claimant”), (the “English Proceedings”).

Trentino and Dexia are also parties to a claim that had already been brought by Trentino against Dexia before the Civil Court of Rome (the “Italian Proceedings”). In the Italian Proceedings, Trentino argues that the Transaction entered into between Dexia and Trentino, as defined below, was inappropriate, and that it has caused losses to Trentino of over EUR 10 million in net payments to Dexia. Trentino asserts that the Transaction is void, thus seeking the recovery of its losses.

For its part, Dexia submits that the Italian Proceedings were brought in breach of the English jurisdiction clause in the ISDA Master Agreement between Dexia and Trentino (itself governed by English law), and which Dexia also submits is, on its true construction, an exclusive English jurisdiction clause. There is an extant challenge by Dexia to the jurisdiction of the Italian court in the Italian Proceedings which is due to be heard in January 2025.

By its claim in the English Proceedings, Dexia is seeking declaratory relief in respect of an interest rate swap transaction (the “Transaction”) pursuant to an ISDA Master Agreement dated 7 October 2010 between Dexia and Trentino (the “Master Agreement”/the “Agreement”), and a confirmation dated 7 March 2011 (the “Confirmation”, and with the Master Agreement, the “Transaction Documents”). It will be noted that the Master Agreement was entered into some 5 months before the Confirmation i.e., before the subject matter of the specific swaps was agreed, and the Confirmation expressly states that: “This Confirmation supplements, forms part of, and is subject to the Agreement. All provisions contained in the Agreement govern the Confirmation”.

The Master Agreement/Agreement is governed by English law (by the “Governing Law Clause”) and contains a bespoke jurisdiction clause (the “Jurisdiction Clause”) (at Schedule Part 4 replacing the standard ISDA Master Agreement clause at section 13(a) and (b) thereof) in the following terms, which Dexia submits (and Trentino denies) is, on its true construction, an exclusive English jurisdiction clause:

“(h) Governing Law and Jurisdiction

Section 13(a) and (b) of the Agreement [the ISDA Master Agreement] shall be deleted and replaced with the following:

(a) Governing Law. This Agreement and any non-contractual obligations arising out of or in connection to it will be governed by and construed in accordance with the laws of England and Wales.

(b) Jurisdiction. With respect to any suit, action or proceedings relating to any dispute, whether contractual or non-contractual, arising out of or in connection with this Agreement (“Proceedings”), each party irrevocably:

(1) submits to the exclusive jurisdiction of the English courts;

(2) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party [the “Waiver Clause”]; and

(3) agrees, notwithstanding the above and to the extent permitted by applicable law, that the bringing of Proceedings before the English courts will not preclude the bringing of Proceedings before the Italian courts.”

Dexia served Trentino out of the jurisdiction, as of right, in reliance on CPR 6.33(2B) which provides:

“(2B) The claimant may serve the claim form on the defendant outside of the United Kingdom where, for each claim made against the defendant to be served and in the claim form—

…

(b) a contract contains a term to the effect that the court shall have jurisdiction to determine that claim; or

(c) the claim is in respect of a contract falling within sub-paragraph (b).”

By its Application Notice dated 1 March 2024 (the “Application”) Trentino seeks two Orders:-

(1) That there is no valid jurisdiction clause in favour of the English Court, and accordingly Dexia was not entitled to serve Trentino out of the jurisdiction in Italy as of right pursuant to CPR 6.33(2B) (the “Jurisdiction Challenge”), alternatively

(2) That the English Proceedings should be stayed on the basis that Italy is the appropriate forum and/or the Italian proceedings constitute a lis alibi pendens (the “Stay Application”).

It will be seen, at the outset, that the issue as to whether the English jurisdiction clause is an exclusive jurisdiction clause is not of relevance to (1) (i.e., the challenge to jurisdiction) given that all that is required is a contract containing a term to the effect that the English court shall have jurisdiction to determine the claim, and it matters not whether that is an exclusive jurisdiction clause for the purpose of CPR 6.33(2B).

The issue is, however, of relevance to (2). Trentino accepts that if the Jurisdiction Clause is an exclusive jurisdiction clause its Stay Application must fail. Even if the Jurisdiction Clause is only a non-exclusive jurisdiction clause then, in combination with the Waiver Clause, Trentino irrevocably waived any right to object to the proceedings being brought in this Court, or to argue that this Court is an inconvenient forum, or that this Court does not have jurisdiction over it, and Dexia submits that there are no “overwhelming or very strong reasons” or “exceptional circumstances” that would warrant a stay, on the applicable principles.

It will also be seen at the outset (in relation to (1)), that in circumstances in which it is common ground that the Master Agreement was entered into, any challenge by Trentino to English jurisdiction under CPR 6.33(2B) would have to go to the root of the contract contained in the Master Agreement (and not merely the subsequent Confirmation). Dexia submits that that is an insurmountable hurdle in relation to the jurisdictional challenge.

There is the following witness evidence before the Court in relation to the Application:-

(1) A first witness statement of Craig Neilson on behalf of Trentino (“Neilson 1”).

(2) A first witness statement of Jonathan Kelly on behalf of Dexia (“Kelly 1”).

(3) A first witness statement of Adrian Giles on behalf of Trentino (“Giles 1”)

(4) A second witness statement of Jonathan Kelly on behalf of Dexia (“Kelly 2”).

On an Application in which much turns on the proper construction of English law contracts (the Master Agreement and the Confirmation), this extensive evidence frequently strays beyond any relevant and admissible factual matrix evidence into legal submission on issues of construction as a matter of English law, and also seeks to opine at length on issues of Italian law (for which no permission has been granted). Neither has any place in a witness statement on a jurisdictional challenge such as the present (certainly without permission in the latter case).

However, neither party has permission to serve any evidence as to Italian law. Dexia's primary position is that Italian law is irrelevant, that such evidence is neither necessary nor proportionate, and that Trentino has wasted both the Court's time, and very substantial party costs, in seeking to pursue points of Italian law at this jurisdiction stage (and without the Court's permission at that).

In this regard on 24 May 2024 (i.e., long after the Application with its 4 hour estimate had been issued on 1 March 2024) Trentino served a first expert report of Associate Professor Ugo Malvagna (“Malvagna 1”) on Italian law (running to some 32 pages and raising multiple issues on Italian law) accompanied by an application notice for an order that Trentino has permission to rely on that Italian law expert evidence (marked with a wholly unrealistic estimate of 30 minutes). Notwithstanding Dexia's primary position that Italian law evidence was irrelevant in relation to the Application, this inevitably provoked a responsive report served on behalf of Dexia on 8 August 2024 from Professor Emanuele Rimini (“Rimini”) (itself running to some 53 pages) accompanied by an application notice the following day, seeking permission to rely upon the same (lest the Court be persuaded to grant Trentino permission to rely upon Malvagna 1). Yet further, and again without permission (but predictably), on 13 September 2024 Trentino served a supplemental report of Professor Malvagna (“Malvagna 2”) itself running to 27 pages.

It is deeply regrettable that the parties did not fix a hearing to determine the applications to adduce expert evidence (the “Expert Applications”) either well in advance of this hearing or at all not least in circumstances in which Dexia denied its relevance to the jurisdictional challenge. That evidence runs to a total of no less than 112 pages of expert opinion on multiple issues of Italian law...