Nomura International Plc v Banca Monte Dei Paschi Di Siena SpA
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 24 October 2013 |
| Neutral Citation | [2013] EWHC 3187 (Comm) |
| Docket Number | Case No: 2013 Folio 292 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 24 October 2013 |
[2013] EWHC 3187 (Comm)
Mr Justice Eder
Case No: 2013 Folio 292
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Richard Handyside QC and Ms Tamara Oppenheimer (instructed by Allen & Overy LLP) for the Claimant/Respondent
Mr Jonathan Nash QC and Mr Douglas Paine (instructed by DAC Beachcroft LLP) for the Defendant/Applicant
Hearing dates: 23 & 24 September 2013
Judgment Approved by the court for handing down (subject to editorial corrections)
Introduction
This is (or at least was originally) an application by the Defendant ("BMPS") for an order that the Court decline jurisdiction in these proceedings brought by the Claimant ("Nomura") pursuant to Article 28(2) of Council Regulation (EC) 44/2001 (the "Judgments Regulation"); alternatively that these proceedings be stayed generally pursuant to Article 28(1) of the Judgments Regulation.
Article 28 provides:
"1. Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings.
2. Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof.
3. For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings."
In the event, in the course of his reply, Mr Nash QC on behalf of BMPS abandoned the application under Article 28(2) and limited BMPS's application to an order for a stay under Article 28(1).
As set out in the Claim Form issued on 1 March 2013, Nomura seeks declaratory relief in relation to certain agreements (the "Agreements") into which it entered with BMPS as part of what is referred to as a "Restructuring", each of which is governed by English law and contains either an exclusive or non-exclusive English jurisdiction clause viz (i) a Mandate Agreement dated 31 July 2009 (the "Mandate Agreement"); (ii) a Global Master Repurchase Agreement ("GMRA") and four annexes to it dated 23 September 2009 (together the "Long Term Repo") amended and restated on 1 December 2010 and in particular the five confirmations dated respectively 14, 19, 19, 28 November 2012 and 12 December 2012; and (iii) an ISDA Master Agreement dated 21 October 1994 (the "ISDA Master Agreement") and various asset swap transactions governed by such agreement entered into between 3 August 2009 and 19 September 2009 on terms set out in a letter agreement (the "Confirmation") dated 9 October 2009 (together the "Asset Swap Transactions"). In particular, as set out in the Claim Form, the declaratory relief sought is (or at least was) in substance as follows:
i) Each of the Agreements is a valid and binding contract between Nomura and BMPS.
ii) All of BMPS's obligations under each of the Agreements remain in full force and effect.
iii) Each of the jurisdiction agreements in the Agreements is valid and binding on BMPS.
iv) The commencement of proceedings in Italy of (a) any proceedings arising out of or in connection with the Agreements or (b) any proceedings against Nomura arising out of the Restructuring, will constitute a continuing breach by BMPS of its contractual obligations, in particular under the jurisdiction agreements, for which BMPS will be liable (inter alia) to pay damages to Nomura.
v) Nomura is not liable, whether on the basis of unjust enrichment or otherwise, to repay in whole or in part any amount received from or otherwise on account of BMPS under or in connection with any of the Agreements (or any of them) or the Restructuring.
vi) Nomura is not liable to BMPS (in damages or otherwise and whether in contract, tort or otherwise) (a) for breach of any contractual or non-contractual obligation arising out of or in connection with the Agreements (or any of them) or the Restructuring or (b) in respect of any act or omission in connection with the Agreements (or any of them) or the Restructuring.
On 20 June 2013, Nomura served formal notice discontinuing that part of the claim referred to in paragraph (vi) above seeking a declaration for Nomura's non-liability in tort or otherwise and/or for breach of any non-contractual obligation arising out of or in connection with the Agreements. (I should mention that Mr Nash submitted that there remained an ambiguity or lack of clarity with regard to the scope of the relief now sought as referred to in sub-paragraph (vi). In the event, Mr Handyside clarified Nomura's position in his oral submissions and agreed to produce a redraft of paragraph (vi) to make it clear that the declaration sought is limited to non-liability in contract.) Further, in his skeleton argument served shortly before the hearing, Mr Handyside indicated the intention of Nomura to discontinue its claim for declaratory relief as set out in paragraph (iv) above although expressly reserving Nomura's right to challenge the jurisdiction of the Italian court in the Italian proceedings referred to below. Since the hearing, I have been informed that formal notice of such discontinuance has been served.
In essence, BMPS's application is advanced on the basis that these present English proceedings are "related" to certain other proceedings initiated by BMPS (on the same day i.e. 1 March 2013, but shortly before the issuance of the Claim Form in these English proceedings) and currently pending in Italy (the "Italian proceedings"); that the Italian Court was "first seised"; and that this Court should exercise its discretion to stay these English proceedings pursuant to Article 28(1). In summary, it is Nomura's case that (i) these proceedings and the Italian proceedings are not "related actions" within the meaning of Article 28; and that (ii) in any event i.e. even if the two sets of proceedings constitute "related actions", this Court should refuse to grant a stay.
I should mention that in the course of the hearing there was some debate as to what the position might be if this application were to be determined under the revised Judgments Regulation regime (Regulation (EU) No 1215/2012 of 12 December 2012) which will come into force on 10 January 2015. There was also some debate as to the reasons which lie behind such revision and what, if any, assistance might be gained in the present context by reference to such revision or supposed reasons for it. In the event, it seems to me that little, if any, assistance is to be gained by such exercise and that I should determine this application on the basis of the wording of the existing Judgments Regulation.
Background
The following is a summary of the relevant background based on the evidence and skeleton arguments submitted by the parties for the purposes of this hearing. Certain aspects are or may be in dispute. This summary is therefore not intended to be determinative and simply provides the backdrop against which the present application has to be considered.
BMPS is a bank domiciled in the Republic of Italy. In late 2005, BMPS entered into a transaction arranged by Dresdner Bank under which BMPS subscribed for €400 million Series 2005–8 Floating Rate Secured Liquidity Linked Notes due 2012 (the "Alexandria Notes") issued by a special purpose vehicle called Alexandria Capital Plc. The yield and repayment of the Alexandria Notes were linked to the performance of underlying securities, specifically loan notes issued by Skylark Ltd (the "Skylark Notes"), which were held by another special purpose vehicle, Alchemy Capital Plc ("Alchemy"). The Skylark Notes were linked in turn to a portfolio of mortgage loans and Collateralized Debt Obligations. In 2008/2009 the assets underlying the Alexandria Notes deteriorated which, according to BMPS, exposed BMPS to heavy capital losses.
In essence, it is BMPS's case in the Italian proceedings that BMPS's former senior management, in particular the former Chairman, Mr Giuseppe Mussari, and the former General Manager, Mr Antonio Vigni, acting in conflict of interest and in breach of their duties to BMPS, sought to conceal the losses on the Alexandria Notes from the Board of BMPS and from its shareholders; and with the assistance of Nomura devised a sophisticated scheme in order to do so which involved the parties entering into the Agreements referred to above and thereby putting into effect the Restructuring. In particular, BMPS alleges that, although ostensibly a purchase of Italian government bonds carried out through an asset swap, in fact the Restructuring subjected BMPS to enormous costs and risks, whilst lacking any economic rationale; and that Nomura secured significant commissions for assisting BMPS's former senior management in this enterprise. According to BMPS, the true nature of the Restructuring emerges from the Mandate Agreement which, says BMPS, was concealed from BMPS's Board and from the public supervisory authorities and was discovered only in October 2012 when a copy of the agreement was found by BMPS's new management in a safe used by Mr Vigni. It is BMPS's case that the Mandate Agreement is a key document that underpins BMPS's action in Italy, because it is the link between the various transactions which were devised to fraudulently conceal BMPS's losses. As yet, Nomura has not responded in the Italian proceedings and it is inappropriate for me to say anything about the merits. For present purposes, it is sufficient to note that Nomura disputes important parts of the...
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