Factual and Procedural Background
The Plaintiff, an English bank, and the Defendant, an Italian pension fund, are involved in a dispute arising from a transaction executed via a Conditional Asset Exchange Letter dated 21 September 2007. The Defendant exchanged fund assets for credit-linked notes known as the "Ferras CDO securities" and alleges it suffered significant losses, seeking compensation from the Plaintiff.
The Defendant initiated proceedings in the Civil Court of Milan on 23 June 2014 (the Milan proceedings), which the Plaintiff contends breach contractual provisions granting exclusive jurisdiction to the English courts. Consequently, the Plaintiff commenced proceedings in England on 15 September 2014 to seek declarations affirming the exclusive jurisdiction of the English courts and other relief.
The Defendant applied under Articles 27 or 28 of Council Regulation (EC) No. 44/2001 (the "Judgments Regulation") for an order restraining the English court from exercising jurisdiction, asserting that the Milan court was first seised. The Plaintiff responded with a summary judgment application asserting no defence to its claim that the Milan proceedings breach the exclusive jurisdiction clauses.
The English court scheduled a combined hearing for the jurisdiction and summary judgment applications, which took place on 14 and 15 September 2015, supported by seven witness statements. The court was tasked with deciding the Defendant's jurisdiction application, whether to hear the summary judgment application concurrently, and if so, whether the Plaintiff was entitled to summary judgment.
Legal Issues Presented
- Whether the English court should exercise jurisdiction given the Defendant's application under Articles 27 or 28 of the Judgments Regulation, considering the Milan proceedings were first seised.
- Whether it was appropriate to hear the Plaintiff's summary judgment application concurrently with the jurisdiction application.
- If the summary judgment application was heard, whether the Plaintiff was entitled to summary judgment on the basis that the Milan proceedings breached the exclusive jurisdiction clauses.
Arguments of the Parties
Defendant's Arguments
- The Defendant's Milan proceedings assert claims based on Italian law relating to alleged breaches of investment regulations, tortious liability, and nullity of contractual agreements, including the jurisdiction and indemnity clauses.
- The Defendant contends the English jurisdiction clause is invalid because no valid choice of English law was made, and the contractual framework agreements required by Italian law were never executed.
- It argues that the Milan court has jurisdiction under Article 5(3) of the Judgments Regulation due to tort claims and that the jurisdiction clause is ineffective as the underlying agreements are null or void.
- The Defendant submits that the English jurisdiction clauses should be construed under Italian law and that the Plaintiff waived its right to insist on exclusive English jurisdiction by participating in mediation without reservation.
- The Defendant further contends that anti-suit injunctions are not available to prevent the Milan proceedings and that the Plaintiff's indemnity claims are premature or uncertain in scope.
Plaintiff's Arguments
- The Plaintiff asserts that the exclusive jurisdiction clauses in the contractual agreements between the parties are valid and enforceable, covering all claims arising out of or in connection with the transaction.
- The Milan proceedings constitute a breach of these exclusive jurisdiction clauses.
- The Plaintiff denies that participation in mediation constituted a waiver of its rights to exclusive jurisdiction in England.
- The Plaintiff submits that the claims in the Milan proceedings and the English proceedings do not involve the same cause of action under Article 27 of the Judgments Regulation, as the Milan claims are tortious and the English claims are contractual.
- It contends that the jurisdiction clauses, including that in the Professional Client Agreement (PCA), are exclusive despite the wording and that the Plaintiff is entitled to summary judgment on liability for breach of these clauses.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| The Alexandros T (Starlight Shipping Co v Allianz Marine & Aviation Versicherungs AG) [2014] 1 All ER 590 |
Clarifies the interpretation of "same cause of action" under Article 27 of the Judgments Regulation and the distinction between claims for breach of jurisdiction clauses and substantive claims. |
The court applied the principle that claims for breach of jurisdiction clauses differ from substantive claims, concluding the Milan and English proceedings do not have the same cause of action. |
| Deutsche Bank AG v Asia Pacific Broadband Wireless Communications Inc [2009] 2 All ER (Comm) 129 |
Establishes the separability of jurisdiction clauses from the main contract and that validity challenges to the contract do not automatically invalidate jurisdiction clauses. |
The court relied on this to reject the Defendant's argument that the jurisdiction clause was invalid due to the alleged nullity of the substantive agreements. |
| Turner v Grovit [2005] 1 AC 101 |
Addresses the availability and limits of anti-suit injunctions in the context of EU law and mutual trust between courts. |
The court held that anti-suit injunctions are not available to restrain foreign proceedings alleged to breach jurisdiction clauses, consistent with EU principles. |
| West Tankers Inc v Allianz SpA [2009] 1 AC 1138 |
Similar to Turner v Grovit, it discusses the limits of anti-suit injunctions and mutual trust between courts of member states. |
The court referenced this authority in rejecting the Defendant's anti-suit injunction argument. |
| Continental Bank v Aeakos [1994] 1 WLR 588 |
Interpretation of jurisdiction clauses and their exclusivity despite lack of explicit wording. |
The court used this case to support the conclusion that the PCA clause, though not explicitly exclusive, should be construed as exclusive. |
| Benincasa v Dentalkit SRL [1997] ECR 1-3767 |
European authority supporting the separability of jurisdiction agreements from the main contract. |
Supported the court's view on separability of jurisdiction clauses from the underlying contract. |
| The Tatry [1999] QB 515 |
Clarifies the meaning of "cause of action" and "objet" for jurisdictional purposes under the Judgments Regulation. |
Used to analyze identity of cause and object between the English and Milan proceedings. |
| JP Morgan Europe Ltd v Primacom AG [2005] 2 All ER (Comm) 764 |
Defines "rules of law" and the basis for determining identity of cause of action. |
Referenced in assessing the claims in both jurisdictions for identity of cause. |
| Gantner Electronic GmbH v Basch Exploitatie Maatschappij BV Case C-111/01 [2003] ECR I-4207 |
Addresses the identity of "objet" in jurisdictional analysis. |
Applied in considering the end in view of the proceedings in each jurisdiction. |
| Research in Motion UK Ltd v Visto Corp [2008] 2 All ER (Comm) 560 |
Differentiates between claims and actions for purposes of Articles 27 and 28. |
Supported the court's distinction between same cause of action and related actions. |
| Glencore International AG v Shell International Trading and Shipping Co Ltd [1999] 2 All ER (Comm) 922 |
Emphasizes the flexible application of Article 28 over Article 27 in jurisdictional disputes. |
Referenced to support discretionary stay considerations. |
| Mackender v Feldia [1967] 2 QB 590 |
Domestic authority on separability of jurisdiction clauses. |
Supported the court's position on separability of jurisdiction clauses. |
| Fiona Trust v Privalov [2008] 1 Lloyds Rep 254 |
Domestic authority affirming separability of jurisdiction clauses. |
Reinforced the principle that jurisdiction clauses are independent agreements. |
| Speed Investments Ltd v Formula One Holdings Ltd [2005] 1 WLR 1233 |
Guidance on when summary judgment applications may be heard concurrently with jurisdiction challenges. |
Informed the court's approach to hearing the summary judgment application at the same time as the jurisdiction application. |
| Rishal Moloobhoy v Shams Mohamed Kanani [2012] EWHC 1670; [2013] EWCA Civ 600 |
Confirms that summary judgment applications can be heard with jurisdiction challenges in exceptional cases. |
Supported the court's decision to hear summary judgment concurrently with jurisdiction issues. |
| Mauritius Commercial Bank Ltd v Hestia Holdings Ltd [2013] EWHC 1328 (Comm) |
Discusses the exclusivity of jurisdiction clauses in financing transactions with clauses similar to the PCA. |
Supported the conclusion that the PCA jurisdiction clause was exclusive despite wording. |
Court's Reasoning and Analysis
The court began by examining the jurisdictional dispute under Articles 27 and 28 of the Judgments Regulation. It acknowledged that while the Milan and English proceedings involve the same parties, the central question was whether they involve the "same cause of action" under Article 27.
Applying the authoritative principles from The Alexandros T and related cases, the court determined that the Defendant’s main claim in Milan for damages in tort does not have the same cause as the Plaintiff’s claims in England for breach of contract concerning jurisdiction clauses. The court emphasized the separability of jurisdiction clauses from the substantive contract, rejecting the Defendant’s argument that nullity of the contract invalidates the jurisdiction clauses.
Regarding the Defendant’s secondary claims challenging the contracts’ validity, the court found that these do not amount to the same cause or object as the Plaintiff’s claims in England, notably as the Professional Client Agreement (PCA) was not challenged in Milan and contains a jurisdiction clause that the court construed as exclusive.
The court also rejected the Defendant’s waiver argument, finding that participation in mandatory mediation under Italian law does not amount to submission to Italian jurisdiction, particularly as the Plaintiff made an oral reservation of rights.
On the question of whether to hear the summary judgment application concurrently with the jurisdiction application, the court found this case to be one of the rare exceptions where such concurrent hearing was appropriate, given the parties’ preparedness and the efficiency considerations.
In assessing the summary judgment application, the court found that the Milan proceedings fall within the scope of the jurisdiction clauses and that the Defendant had no real prospect of successfully defending the claim that bringing those proceedings breached the exclusive jurisdiction agreements. However, the court declined to grant summary judgment regarding the indemnity claim under the PCA due to uncertainty about its scope.
Finally, the court exercised its discretion under Article 28 to refuse a stay of the English proceedings, emphasizing the strong presumption in favour of enforcing exclusive jurisdiction clauses and the practical advantages of proceeding in England.
Holding and Implications
The court REFUSED TO STAY the English proceedings under Articles 27 and 28 of the Judgments Regulation. It held that the Milan and English proceedings do not involve the same cause of action for the purposes of Article 27, and that the English court is entitled to exercise jurisdiction despite the Milan proceedings being first seised.
The court granted summary judgment in favour of the Plaintiff on the issue of breach of the exclusive jurisdiction clauses, declaring that the Defendant’s Milan proceedings fall within the scope of those clauses and constitute a breach. However, the court did not grant summary judgment on the Plaintiff’s indemnity claim under the PCA, leaving that issue for future determination.
The decision enforces the principle of upholding exclusive jurisdiction clauses and confirms the separability of jurisdiction agreements from the main contract, limiting the ability of a party to avoid such clauses by challenging the validity of the underlying contract. No new legal precedent was established beyond the application of settled principles to the facts.