SwissMarine Corporation Ltd v O.W. Supply & Trading A/S (in Bankruptcy)
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Andrew Smith |
| Judgment Date | 05 June 2015 |
| Neutral Citation | [2015] EWHC 1571 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2015183 |
| Date | 05 June 2015 |
[2015] EWHC 1571 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Andrew Smith
Case No: 2015183
Steven Berry QC (instructed by Holman Fenwick Willan LLP) for the Claimant
Camilla Bingham QC and Stephanie Wood (instructed by Clifford Chance LLP) for the Defendant
Hearing dates: 18 and 21 May 2015
On Friday 15 May 2015 SwissMarine Corporation Limited ("SwissMarine") applied for an anti-suit injunction against O. W. Supply & Trading A/S ("OW Supply"), a Danish company that had filed for bankruptcy in the Bankruptcy Court of Aalborg, Denmark on 7 November 2014. The application was said to be urgent: it was initially made ex parte, but short notice was apparently given to OW Supply's solicitors, Clifford Chance LLP ("Clifford Chance"), on 14 May 2015, which was a bank holiday in Denmark. SwissMarine sought an order restraining OW Supply (i) from proceeding with an action that it had brought in the District Court in Lyngby, Denmark (the "Lyngby action") and (ii) from commencing any other or further proceedings in Denmark or elsewhere against SwissMarine directed to obtaining a "disputed" sum claimed under an ISDA Master Agreement (the "ISDA Agreement") or any transaction thereunder.
I did not have time to hear the application on 15 May 2015, but held a short hearing, at which SwissMarine was represented by Mr Stephen Robins and OW Supply was represented by Ms Camilla Bingham QC. I had a skeleton argument from Mr Robins, but (as was wholly understandable in the circumstances) only a short note from Ms Bingham. I adjourned the application to Monday 18 May 2015: I had satisfied myself that there was no immediate urgency for an order in respect of the Lyngby action because it became clear that OW Supply could not prosecute it until 26 May 2015 (when apparently it might have been able to enter a default judgment if SwissMarine neither served a defence nor had an extension of time to do so), and I made an order designed to protect SwissMarine from OW Supply bringing other proceedings before I heard the application. (On reflection, perhaps the order was not justified: in his skeleton argument Mr Robins expressed a concern that OW Supply might obtain default judgment in the Lyngby action and then try to enforce it elsewhere. On re-reading the documents, I found no evidence or submission about a risk from other proceedings except that they might be brought for this purpose, but I did not appreciate that when I made the order.)
At the resumed hearing Ms Bingham and Ms Stephanie Wood represented OW Supply, having served a longer skeleton over the weekend. Mr Robins was unable to attend on 18 May 2015 and Mr Steven Berry represented SwissMarine, having served a "supplementary skeleton argument". There was a distinct change of the focus of SwissMarine's argument. On 15 May 2015 it was on a submission that the Lyngby action was vexatious or oppressive. In the supplemental skeleton argument and on 18 May 2015 it was that in bringing and pursuing the Lyngby action OW Supply was in breach of a jurisdiction agreement in the ISDA agreement. However, as I see it, the application was always put on both bases: at least neither was ever disclaimed.
The parties agreed at the start of the resumed hearing that I should deal with the application as if it had been served with the requisite notice (although I did not understand that that concession on the part of OW Supply extended to any question of costs), and so I treat this as an inter partes application.
At the resumed hearing Mr Berry applied orally to amend the claim form and the particulars of claim. He also applied for permission of the court under article 20.6 of Schedule 1 of the Cross-Border Insolvency Regulations 2006 (the "CBIR") to make the proposed amended claim. I return to these applications.
At the hearing on 18 May 2015 there emerged questions that counsel had not anticipated, in particular about the meaning and effect of the jurisdiction provision in the 2002 Master Form of ISDA Agreement. I was sent further submissions in writing and a number of authorities after the hearing. On 21 May 2015 I heard further brief submissions about the new points, and then after it Ms Bingham again put in further written submissions on 27 May 2015. So did Mr Berry, whose late submissions went beyond the new points, but they reached me only after I had sent the parties a draft of my judgment: they did not persuade me to alter any of my conclusions. As a result of this chequered history and because of the court's vacation, I give judgment only today on what had started life as an ex parte application only on 15 May 2015.
The ISDA Agreement was made between SwissMarine and OW Supply and was dated 22 May 2014. It was in the ISDA 2002 Master Agreement form and included a schedule. It recorded that SwissMarine and OW Supply anticipated entering into one or more transactions. As is evidenced by a document headed "Confirmation – Swap" and dated 3 September 2014, they entered into such a transaction (the "September transaction"). Its details are not important for present purposes: it was by way of a derivatives contract for differences, SwissMarine being the fixed price payer and OW Supply being the floating price payer. The confirmation document expressly stated that it supplemented, formed part of and was subject to the terms of the ISDA Agreement, which itself provided that such confirmations were included in the Master Agreement and that "All Transactions [were] entered into in reliance on the fact that this Master Agreement and all Confirmations [formed] part of a single agreement between the parties …, and the parties would not otherwise enter into any Transactions".
The ISDA Agreement specified various "Events of Default" including that a party "becomes insolvent or unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due" and other events associated with insolvency. There is no dispute that there was an Event of Default when OW Supply filed for bankruptcy on 7 November 2014, and the Bankruptcy Court of the Court of Aalborg appointed Ms Pernille Bigaard and Mr John Sommer Schmidt as trustees. (Other Events of Default are pleaded by SwissMarine in its Particulars of Claim, but they are not relevant for present purposes.) It defined the expression "Potential Event of Default" as "any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default". Under the ISDA Agreement, as SwissMarine alleges and I shall assume for present purposes, because of the Event of Default it (but not OW Supply) had the right (but not the obligation) to designate an Early Termination Date, but it has not done so. The agreement also provided that "Each obligation of each party [to make specified payments] is subject to (1) the condition precedent that no Event of Default or Potential Event of Default has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant transaction has occurred or been effectively designated and …". It included at section 13 provisions about the governing law and jurisdiction, which I set out later.
On 20 February 2015 SwissMarine brought these proceedings. It relied on a provision of the ISDA Agreement that each party represented that no "Event of Default or Potential Event of Default or, to its knowledge, Termination Event [a defined expression, which I need not recite or explain] with respect to it has occurred or is continuing", which representation was to be deemed repeated when a transaction was entered into under the ISDA Agreement; and it alleged that that representation by OW Supply was untrue when the ISDA Agreement and the transaction were made in that on 22 May 2014 and 22 September 2014 OW Supply was insolvent or unable to pay its debts. SwissMarine's prayer for relief (as pleaded in the Particulars of Claim dated 20 February 2015) did not include injunctive relief, and was for:
"(1) A declaration that the Claimant is entitled to rescind the Master Agreement and/or the Transactions for misrepresentation.
(2) A declaration that an Event of Default within Section 5(a) of the Master Agreement has occurred in respect of the Defendant and is continuing.
(3) A declaration that, pursuant to Section 2(a)(iii) of the Master Agreement, and for so long as an Event of Default in respect of the Defendant is continuing, the Claimant is not obliged to make any payment to the Defendant in respect of any Transaction governed by the Master Agreement.
(4) A declaration that no Early Termination Date has been designated or occurred.
(5) A declaration that no rule of Danish insolvency law will have any effect as a matter of English law to alter or disapply any of the provisions of the Master Agreement.
(6) A declaration that, the Claimant having commenced these proceedings against the defendant in England, Section 13 of the Master Agreement confers exclusive jurisdiction on the High Court of Justice of England and Wales and prohibits the Defendant from commencing any proceedings against the Claimant in any other jurisdiction in respect of the Master Agreement or the Transactions (or any of them).
(7) Costs.
(8) Further or other relief".
The claimants, of course, rely in support of the claim for a declaration about the effect and application of section 2(a)(iii) on the judgments of the Court of Appeal in Lomas v JRF Firth Rixson Inc, [2012] EWCA Civ 419.
On 3 February 2015 Peter Smith J had made a Recognition Order in respect of OW Supply (and other associated entities) under the CBIR, and it was advertised in the...
To continue reading
Request your trial
-
UnipolRe v Covéa Insurance; Markel International v General Reinsurance
...Power Sector Assets and Liabilities Management Corp [2018] EWHC 487 (Comm) and Swiss Marine Corp Ltd v OW Supply and Trading A/S [2015] EWHC 1571 (Comm), in all of which the court had regard to what the User's Guide had said about the purpose of changes made to the 1992 ISDA Master Agreem......
-
Derivatives Update: The 2002 ISDA Master Agreement's Jurisdiction Clause
...recent case of SwissMarine Corporation Ltd v OW Supply & Trading A/S (in bankruptcy) [2015] EWHC 1571 (Comm) reached some interesting conclusions as to how the jurisdiction clause in the 2002 ISDA Master Agreement operates when the English Court's jurisdiction is SwissMarine and OW Supp......
-
Anti-Suit Injunctions, OW Bunker And ISDA Master Agreements
...Corporation Limited v O.W. Supply & Trading A/S (in bankruptcy) [2015] EWHC 1571 (Comm) The Commercial Court has recently refused to grant an anti-suit injunction to SwissMarine Corporation Limited (SwissMarine) to restrain proceedings brought by O.W. Supply & Trading A/S (OW) again......