UBS Ltd v Regione Calabria [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Popplewell J. |
| Judgment Date | 23 March 2012 |
| Date | 23 March 2012 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division (Commercial Court)
Popplewell J.
Sonia Tolaney QC and Tom De Vecchi (instructed by Cleary Gottlieb, Steen & Hamilton LLP) for the claimants.
Andrew Thomas (instructed by McGrigors LLP) for the defendant.
The following cases were referred to in the judgment:
Bentinck v BentinckUNK [2007] EWCA Civ 175.
Cooper Tire & Rubber Co Europe Ltd v Dow Deutschland IncUNK [2010] EWCA Civ 864; [2010] 2 CLC 104.
Fallimento Belleli SpA v Dikema & Chabot Holding BVECAS (Court of Mantova, Case No 4597/2003).
Owens Bank Ltd v BraccoELR [1994] QB 509.
Research in Motion UK Ltd v Visto CorpUNK [2008] EWCA Civ 153; [2008] 2 All ER (Comm) 560.
Sarrio SA v Kuwait Investment Authority [1997] CLC 1640; [1999] 1 AC 32.
Stribog Ltd v FKI Engineering LtdUNK [2011] EWCA Civ 622; [2011] 1 CLC 1005.
WPP Holdings Italy SRL v BenattiUNK [2007] EWCA Civ 263; [2007] 1 CLC 324.
Banking — Swaps — Conflict of laws — Jurisdiction — Stay of proceedings — Related proceedings — Italian public authority — Proceedings in England and Italy — Authority issued Italian proceedings and served them at bank's London offices — Bank issued English proceedings for declarations of non-liability — Whether Italian summons and service valid under Italian law — Italian court first seised of proceedings involving same parties and same cause of action — Proceedings related with substantial risk of conflicting decisions — Council Regulation 44/2001, art. 27, 28.
This was an application by the defendant Italian public authority (Calabria) for a declaration that the court did not have jurisdiction, alternatively should not exercise jurisdiction, over the claims brought against it by the claimants.
The second claimant, UBS AG, was the parent company of the UBS Group. It was incorporated in Switzerland and had a branch in London. The first claimant, UBS Limited, was an English subsidiary of UBS AG.
In 2002 Calabria entered into an advisory contract with UBS Limited and Banca Nationale del Lavoro (BNL) to perform certain services in relation to its regional debt. The contract was subject to Italian law and jurisdiction.
Between 2003 and 2007 UBS Limited and UBS AG entered into a number of interest rate swap transactions with Calabria. The transactions were governed by an ISDA Master Agreement which provided for English law and jurisdiction.
Calabria commenced proceedings in the Italian court against “UBS Warburg AG” and served the proceedings on UBS in London. At the time there was no company within the UBS group called UBS Warburg AG.
UBS Limited issued English proceedings claiming declarations of non-liability in relation to the swap transactions and in relation to the advisory contract. UBS AG also issued English proceedings in relation to the swap transactions to which it was a party. UBS challenged the jurisdiction of the Italian court and Calabria challenged the jurisdiction of the English court.
Calabria argued that the Italian court was first seised of proceedings involving the same cause of action and involving the same parties as the English proceedings so as to engage art. 27 of Regulation 44/2001; or that in any event the Italian court was first seised of proceedings which were related to the English proceedings so as to engage art. 28. Alternatively, the English proceedings should be stayed pursuant to art. 23 because of the Italian jurisdiction agreement in the advisory contract.
UBS Limited and UBS AG argued that art. 27 was not engaged because the Italian proceedings were commenced against, and served upon, a non-existent entity described as UBS Warburg AG.
Held staying the proceedings:
1. The terms of the summons in the Italian proceedings identified reasonably clearly that the entity against which the claim was being advanced was, or at least included, UBS Limited. The use of “UBS Warburg AG” introduced an element of doubt, but on a careful analysis of the document, the room for uncertainty so far as UBS Limited was concerned was small.
2. The fact that the summons itself identified with reasonable clarity that the claim was advanced against UBS Limited rendered the service on the London place of business of its parent company, UBS AG, sufficient to identify with sufficient certainty the intention that such service was to be on UBS Limited for the purposes of the Italian Civil Code. Even if there were room for some doubt, that was to be resolved in favour of UBS Limited and there would not be “total uncertainty” about it, which was the test in Italian law. If that was wrong, any defect in service was cured by the appearance filed by UBS Limited in the Italian proceedings which operated retrospectively to the date of the original purported service.
3. It followed that vis-a-vis UBS Limited the Italian court was first seised of proceedings brought by Calabria. Those proceedings were not subject to any nullity or invalidity. They involved the same cause of action as the proceedings brought by UBS Limited against Calabria in England. The English court would therefore stay those proceedings pursuant to art. 27 of the Judgments Regulation.
4. So far as UBS AG was concerned the Italian court was not and never had been seised of valid or effective proceedings. It was reasonably clear that the Italian proceedings did not advance any claim against UBS AG. The summons advanced a coherent case against UBS Limited alone, and against no other UBS company. As a matter of Italian law it was “totally unclear” that the summons was intended to advance any claim against UBS AG, or if so what the legal or factual basis for any such claim would be. There was therefore invalidity of the summons and the service under the Italian Civil Code.
5. English proceedings for a declaration of non-liability by UBS AG alone and Italian proceedings against UBS Limited and the other bank defendants who were counterparties to the derivative transactions were related proceedings within art. 28. There could be a substantial overlap between the issues in the claims by UBS AG and the issues in Calabria's claims in Italy against UBS Limited, of which the Italian court would remain seised. The degree of overlap was such that the risk of conflicting decisions was substantial and acute. The Italian tort claims were governed by Italian law which an Italian court was best placed to determine. English law issues arose in relation to the scope and application of the ISDA Master Agreement, but those were issues with which the Italian court would inevitably be dealing in any event in relation to the claim against UBS Limited. As a matter of discretion the claim by UBS AG should be stayed pursuant to art. 28.
Popplewell J: Introduction
1. This is an application by the defendant, Regione Calabria (“Calabria”) which is an Italian public authority. It seeks a declaration that the court does not have jurisdiction, alternatively should not exercise jurisdiction, over the claims brought against it by the claimants. The application is made on the basis that the proceedings fall within Article 27, or alternatively Article 28 of Council (EC) Regulation number 44/2201 of 22 September 2000 (“the Judgments Regulation”). In the alternative it is contended that the Italian courts have exclusive jurisdiction over the dispute under Article 23 of the Judgments Regulation.
2. The second claimant, UBS AG, is the parent company of the UBS Group. It is incorporated in Switzerland. It has a branch in London with a registered branch office at 1 Finsbury Avenue, London, EC2M 2PP. It also carries on business at 100 Liverpool Street, London EC2M 2RH.
3. The first claimant, UBS Limited, is a company incorporated under the laws of England and Wales and is a wholly owned subsidiary of UBS AG. Its registered address is 1 Finsbury Avenue, London, EC2M 2PP. It was formerly called UBS Warburg Limited.
4. On 5 March 2002 Calabria entered into a written agreement (“the Advisory Contract”) with UBS Limited and Banca Nationale del Lavoro (“BNL”) to perform certain services in relation to its regional debt. Under Article 1 Calabria appointed BNL and UBS Limited as rating advisors to advise and assist it in obtaining a credit rating. The work was to comprise obtaining the best possible credit rating for Calabria. It was to include preparing a prospectus to be submitted to credit rating agencies; providing assistance in preparing the meetings with the credit rating agencies; and liaising between the credit rating agencies and Calabria. Under Article 2, BNL and UBS Limited were appointed as arrangers to prepare a Euro denominated medium term note programme for Calabria. The work involved was to include the preparation, in collaboration with both English and Italian legal advisors, of the documentation for the medium term note programme; obtaining the listing of the medium term note programme on the Luxembourg or London Stock Exchange; and selecting, in agreement with Calabria, the dealers for the medium term note programme. By Article 4 BNL and UBS Limited were to provide these services without requesting any remuneration.
5. By Article 8 Calabria appointed BNL and UBS Limited to,
“verify possible restructuring transactions for the regional debt, offering the necessary support free of charge in the analysis and restructuring phase, providing [Calabria] with suitable calculation systems, and organising training courses for the regional employees engaged in actively managing the regional debt.”
6. Article 9 provided:
“this contract shall be valid until the conclusion of the transactions necessary for performing the tasks described above.”
7. Article 11 provided:
“This private deed shall be governed by Italian law. In the event of a dispute jurisdiction shall lie with the Italian judge and the Court of Catanzaro.”
8. Between 2003 and 2007 UBS Limited and UBS AG entered into a number of interest rate swap...
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