ING Bank N.v v. Banco Santander S.A.
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Cockerill |
| Judgment Date | 21 December 2020 |
| Neutral Citation | [2020] EWHC 3561 (Comm) |
| Docket Number | Case No: FL-2020-000002 |
| Court | Queen's Bench Division (Commercial Court) |
[2020] EWHC 3561 (Comm)
Mrs Justice Cockerill DBE
Case No: FL-2020-000002
IN THE HIGH COURT OF JUSTICE
OF ENGLAND AND WALES
COMMERCIAL COURT
QUEEN'S BENCH DIVISION
FINANCIAL LIST
Royal Courts of Justice,
Rolls Building
Fetter Lane,
London, EC4A 1NL
Felicity Toube Q.C. and Marcus Haywood (instructed by Boies Schiller Flexner (UK) LLP) for the Claimants
Robin Dicker Q.C. and Clara Johnson (instructed by Clifford Chance LLP) for the Defendant
Hearing dates: 3,4 November 2020 Draft Judgment sent to parties: 17 December 2020
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic
Introduction
This is the hearing of the Defendant's application dated 21 April 2020 (the “Application”) seeking, amongst other things, a declaration that the Court does not have jurisdiction to hear the claim issued by the Claimants (“ING”) by claim form dated 7 February 2020 (the “Claim”).
The critical point in this application is whether this is a case about claims which a syndicate of eight lenders, including ING, had against Marme Inversiones 2007 S.L.U (“Marme”) under a loan agreement (the “Loan Agreement”) and related swap agreements (the “Swap Agreements”) (together “the Marme Agreements”) which were entered into between the lenders and Marme in September 2008, or whether it is about the effect of the ongoing liquidation of Marme in Spain on those claims. The Defendant Applicant says the latter, the Claimant Respondents say the former.
By way of explanation, the Defendant here is not Marme. It is Banco Santander SA (“Santander”). Santander is not and has never been a party to the Marme Agreements. Santander is the successor to a party (Sorlinda Investments S.L.U. “Sorlinda”) who in some form assumed Marme's liabilities after Marme went into liquidation. However, in these proceedings ING seek declarations against Santander that they are entitled to retain interest which they received in respect of the Loan Agreement during the course of Marme's liquidation (the “Loan Interest”). They also claim interest from the Defendant in respect of the relevant Swap Agreement (the “Swap Interest”).
The field of battle may be summarised in skeletal form thus. Santander contends that the court should refuse to exercise jurisdiction or order a stay because:
i) The claim falls within the EU Insolvency Regulation on insolvency proceedings (the “Insolvency Regulation”) and is excluded from the scope of the recast Regulation (EU) No. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the “Brussels Regulation”) pursuant to Article 1(2)(b) of the Brussels Regulation.
ii) Even if the Claim does not fall within the exception under Article 1(2)(b), ING cannot rely upon Article 25 of the Brussels Regulation.
iii) As a matter of Spanish law, ING has not established that Sorlinda became liable to ING for Marme's liabilities.
iv) There are in any event grounds for the Court to refuse to exercise its jurisdiction and/or to order a stay.
ING contends that:
i) The bankruptcy/winding up exclusion in Article 1(2)(b) of the Brussels Regulation does not apply. The Claim is between two solvent entities in relation to contractual payment obligations under the Marme Agreements, and has no effect on Marme or any of its other creditors. The Claim does not derive directly from Marme's winding up nor is it closely connected with that winding up.
ii) The question of whether or not Santander is bound by the Marme Agreements is a question of English law having appropriate regard to the effect of the relevant “assumption” of Marme's obligations by Sorlinda (now Santander) as a matter of Spanish law.
iii) There is (at least) a good arguable case that as a consequence of the “assumption” Santander has a direct liability to ING under the Marme Agreements which are subject to the exclusive jurisdiction of the English courts.
iv) There are no grounds for the Court to refuse to exercise its jurisdiction and/or to order a stay.
For the reasons which I give below I conclude that the jurisdictional challenge succeeds on the Article 25 point, and also on the Insolvency Regulation point. The other grounds (assumption in Spanish Law and case management stay) would have failed.
Factual Background
On 12 September 2008, Marme (as borrower) and certain other parties (including ING as lender) entered into the Senior Loan Agreement pursuant to which a facility in the aggregate amount of €1,575,000,000 was made available to Marme for the purpose of the acquisition of the Ciudad Financiera, Boadilla Del Monte, Madrid (the “Ciudad Financiera”) (the headquarters of Santander); Senior Loan Agreement, Clause 3.1.
Under the terms of the Senior Loan Agreement, ING advanced a total sum of €150,000,000 to Marme on terms, amongst other things, providing for the payment of interest on certain dates and on any overdue amount payable by Marme (the “Loan”).
The rights of a Finance Party (which includes ING) under the Finance Documents are separate and independent rights. They give rise to a separate and independent debt that may be enforced separately.
The Swap Agreement
Under Clause 8.3 of the Senior Loan Agreement, Marme was obliged to maintain “Hedging Arrangements” in connection with interest payable under the Senior Loan Agreement.
Accordingly, on 12 September 2008, Marme entered into five Hedging Arrangements with various lenders (the Swap Agreements), including one with ING (i.e. the Swap Agreement). The Swap Agreement is a Hedging Arrangement and a Finance Document within the definition of those terms under the Senior Loan Agreement.
The Swap Agreement takes the form of an ISDA (Multicurrency – Cross Border) Master Agreement and Schedules. The Swap Agreement provides, amongst other things, that interest is payable by the Defaulting Party following Early Termination, from the relevant Early Termination Date to the date the interest is paid.
Governing Law and Jurisdiction Provisions of the Agreement
The Marme Agreements are each governed by English law: Clause 36 of the Senior Loan Agreement; Clause 13(a) of the Swap Agreement and paragraph (i) of Part 4 of the Schedule to the Swap Agreement.
As to jurisdiction:
i) The Senior Loan Agreement contains an exclusive jurisdiction clause in favour of the English courts “ to settle any dispute arising out of or in connection with any Finance Documents”: Clause 37.1(a). As described above, the Swap Agreement is a Finance Document under the Senior Loan Agreement.
ii) The Swap Agreement further provides that “ with respect to any suit, action or proceedings relating to [the Swap Agreement]…, each party irrevocably submits to the jurisdiction of the English courts” where the agreement is subject to English law, as it is: Clause 13(b).
Default and Marme's Insolvency
Under the terms of the Senior Loan Agreement, the Loan fell due on the Final Maturity Date, being 12 September 2013. Interest also fell due on this date, being an Interest Payment Date. Neither the Loan nor interest thereon was paid on that date. Accordingly, interest continued to accrue on these overdue amounts from 12 September 2013 in accordance with Clause 8.4 of the Senior Loan Agreement.
On 4 March 2014, Marme entered into a voluntary insolvency process ( concurso voluntario) in Spain pursuant to which the insolvency administrator of Marme (the “Marme IA”) was appointed by the Spanish Insolvency Court. The process began with the “joint phase” under which the Marme IA produced an inventory of assets and provisional list of creditors. Marme entered liquidation on 4 March 2015, following the conclusion of the joint phase.
Between September 2014 and 2019 there were proceedings commenced by Marme in this court, as further set out below.
Under Spanish insolvency law, the insolvency administrator of Marme (“the Marme IA”) was required to submit, for the approval of the Spanish Insolvency Court, a plan for the liquidation of Marme (the “Liquidation Plan”). The Liquidation Plan is the regulatory instrument for the insolvency and is governed by Spanish Insolvency Law. It regulates the debtor's sale of the assets and the satisfaction of the creditors' claims.
The initial Liquidation Plan was submitted to the Spanish Insolvency Court on 17 May 2015. The Liquidation Plan proposed a coordinated liquidation of Marme together with its direct and indirect holding companies, Delma Projectonwikkeling B.V. (“Delma”) and Ramblas Investments, B.V. (“Ramblas”).
In particular, the Liquidation Plan contained proposals for a buyer to purchase either (i) all of Marme's shares (with all of Marme's debt positions and security remaining in place), or (ii) all of its assets including all the share capital of Marme and/or Delma. Accordingly, under Paragraph 245 to 246 of the Liquidation Plan, potential purchasers were given two options:
“245. Consequently, potential competitors may choose between:
a) The transfer of assets and liabilities as a whole or globally by means of disposal their ownership.
b) Transfer of all the representation of the capital stock of Marme and/or Delma.
246. In the first modality, the object of the transfer would be the assets, free of charges with the extinction of the mortgage and pledge rights that encumber them or with subsistence of the charges and encumbrances weighing on them, — in which case the...
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