Factual and Procedural Background
This appeal arises from competing jurisdiction clauses in contracts between Company A and Company B. Company A appeals a judgment refusing its application to dismiss a claim issued by Company B on jurisdictional grounds. The dispute concerns whether the claims for declaratory relief fall within an English jurisdiction clause in a swap transaction or an Italian jurisdiction clause in a financing agreement between the parties.
Company A contends that the declarations sought fall under the Italian jurisdiction clause in the financing agreement (FA) and has initiated separate proceedings in Italy. Company B's claim relates to an interest rate hedging swap transaction governed by English law and containing an English jurisdiction clause (EJC).
Company A is a project company incorporated in Italy, involved in a power plant project under concession from a provincial authority. Company B is an international bank headquartered in France with branches in London and Milan.
Company A entered into a financing agreement with a syndicate of banks including Company B acting as Mandated Lead Arranger and Agent Bank. The financing agreement is governed by Italian law and contains the Italian jurisdiction clause (IJC) designating the courts of Turin. Company B is defined as "Hedging Bank" under the FA but is not a party in that capacity.
Subsequently, Company A entered into a swap transaction with Company B as Hedging Bank, governed by English law and containing the English jurisdiction clause (EJC). The swap documentation includes an ISDA Master Agreement and related schedules and confirmations.
Company B issued the claim in England after correspondence and meetings in 2016 indicated a serious threat of litigation. Company A requested a waiver of certain rights under the swap, which Company B refused, leading to amendments in the claim.
The judge below held that the claims fall within the EJC and dismissed Company A's application to dismiss for lack of jurisdiction.
Legal Issues Presented
- Whether the claims for declaratory relief fall within the English jurisdiction clause contained in the swap transaction or the Italian jurisdiction clause contained in the financing agreement.
- Whether the judge correctly applied Article 25 of Regulation (EU) No. 1215/2012 concerning jurisdiction agreements.
- Whether the conflict resolution provision in the swap documentation affects the primacy of the jurisdiction clauses.
- The proper interpretation and construction of competing jurisdiction clauses in interrelated contracts governed by different laws.
Arguments of the Parties
Appellant's Arguments (Company A)
- The judge failed to properly construe the Italian jurisdiction clause and did not apply Italian law correctly.
- The judge did not perform the required analysis under Article 25 of the Regulation to characterize the dispute accurately.
- The declarations sought in the claim relate substantially to the financing agreement and thus fall within the Italian jurisdiction clause.
- The conflict resolution provision in the swap documentation should give primacy to the Italian jurisdiction clause where there is overlap.
- Company B has obligations under the financing agreement that give rise to claims properly brought under the Italian jurisdiction clause.
- The judge focused excessively on the English jurisdiction clause and failed to consider the overall contractual scheme.
- Relying on Company A’s response to the claim rather than the claim itself to determine jurisdiction is impermissible.
- The fragmentation of jurisdiction clauses on unclear bases is commercially unworkable and unlikely intended by the parties.
Respondent's Arguments (Company B)
- There was no relevant obligation on Company B under the financing agreement to create competing jurisdiction.
- Even if there were obligations, Company B could not incur liability under the financing agreement for the matters in dispute.
- If competing jurisdiction clauses existed, the proper approach is to identify the "centre of gravity" of the claim, which lies with the swap transaction governed by the English jurisdiction clause.
- The conflict resolution provision applies only to substantive conflicts of terms, not to jurisdiction clauses.
- The declarations sought derive directly from the swap documentation and are governed exclusively by the English jurisdiction clause.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Trust Risk Group SPA v Amtrust Europe Ltd [2015] EWCA Civ 437 |
Construction of competing jurisdiction clauses in multiple contracts |
Guided the court to adopt a broad, purposive, and commercially sensible construction of multiple jurisdiction clauses. |
| Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] 1 Lloyd's Rep 767 |
Approach to jurisdiction clauses in interrelated contracts |
Supported the principle that jurisdiction clauses in separate contracts are mutually exclusive unless language dictates otherwise. |
| Sebastian Holdings Inc v Deutsche Bank [2011] 1 Lloyd's Rep 106 |
Broad and purposive construction of jurisdiction clauses |
Confirmed that jurisdiction clauses should be interpreted in light of the overall scheme and commercial context. |
| Wood v Capita Insurance Services Ltd [2017] UKSC 24 |
Interpretation of commercial contracts |
Emphasized investigating language and commercial consequences in contractual interpretation. |
| Costain Ltd v Tarmac Holdings Ltd [2017] EWHC 319 |
Need for certainty in dispute resolution provisions |
Supported the importance of interpreting ISDA documentation to promote clarity and predictability. |
| Re Lehman Brothers International (Europe) (No 8) [2016] EWHC 2417 |
Limited role of factual background in interpreting standard form contracts |
Confirmed that standard ISDA terms have limited context-specific interpretation. |
| Ryanair Ltd v Esso Italiana Srl [2013] EWCA Civ 1450 |
Interpretation of jurisdiction clauses must be based on the contract date |
Rejected reliance on post-contractual events for interpreting jurisdiction clauses. |
| Powell Duffryn Plc v Petereit (Case C-214/89) [1992] ECR 1-1745 |
Limits scope of jurisdiction agreements to disputes arising from the relevant legal relationship |
Supported the requirement that jurisdiction clauses apply only to disputes connected to the contract in which they appear. |
| UBS AG v HSH Nordbank [2009] EWCA Civ 585 |
Construction of multiple jurisdiction clauses in interlinked contracts |
Confirmed that sensible businesspeople do not intend inconsistent jurisdiction clauses to overlap. |
| Deutsche Bank AG v Savona [2018] EWCA Civ 1740 |
Construction and application of competing jurisdiction clauses in related contracts |
Strongly endorsed the presumption of mutual exclusivity of jurisdiction clauses covering different legal relationships. |
| Monde Petroleum S.A. v Westernzagros Ltd [2015] 1 Lloyd's Rep 330 |
Mutual exclusivity of jurisdiction clauses in multiple agreements |
Confirmed that parties do not intend overlapping jurisdiction clauses and that fragmentation may be inherent but must be respected. |
| Vizcaya Partners Ltd v Picord [2016] UKPC 5 |
Role of foreign law experts in contractual interpretation |
Clarified that experts establish foreign law rules but courts interpret contracts accordingly. |
| Morgan Grenfell & Co Limited v SACE Istituto per I Servizi Assicurativi del Commercio [2001] EWCA Civ 1943 |
Limits on foreign law evidence in contractual interpretation |
Distinguished substantive foreign law issues from contractual interpretation. |
| Knorr-Bremse Systems v Haldex Brake Products [2008] EWHC 156 (Pat) |
Objects of Regulation (EU) No. 1215/2012 |
Emphasized certainty in jurisdiction and ease of identifying competent courts. |
Court's Reasoning and Analysis
The court began by recognizing that the dispute turned on the interpretation of competing jurisdiction clauses in two related but separate contracts: the financing agreement (FA) governed by Italian law containing the Italian jurisdiction clause (IJC), and the swap transaction governed by English law containing the English jurisdiction clause (EJC).
The court applied Article 25 of Regulation (EU) No. 1215/2012, which limits jurisdiction agreements to disputes arising out of the particular legal relationship to which they relate. The court noted established authority that where multiple contracts contain jurisdiction clauses favoring different forums, the interpretation is a matter of construction, with a presumption that each clause applies exclusively to its own contract.
The court emphasized a broad, purposive, and commercially sensible approach, considering the overall scheme of the agreements and the commercial context. It found that the FA and the swap transaction governed different legal relationships, each with its own jurisdiction clause, and that there was no conflict between the clauses.
The court rejected Company A’s reliance on foreign law expert evidence regarding the interpretation of the Italian jurisdiction clause, holding that the English court applies the foreign law rules of interpretation but interprets the contract itself.
It was held that the dispute must be characterized at the time the jurisdiction agreement was made, without reference to post-contractual events or subsequent claims. The court found that the declarations sought in the claim derive directly from the swap transaction and its documentation, which includes an entire agreement clause and a jurisdiction clause favoring English courts.
The conflict resolution provision in the swap documentation only applies where there is an actual conflict between terms; here, the court found the jurisdiction clauses complementary rather than conflicting, so the provision was not engaged.
The court also considered the commercial impracticality of Company A’s arguments that the swap rights and obligations are subsumed into the financing agreement, noting that such an interpretation would deprive the English jurisdiction clause of effect and cause undesirable fragmentation.
In sum, the court concluded that the claims fall within the English jurisdiction clause, that Company B had the better argument on jurisdiction, and that the judge below was correct to refuse dismissal for lack of jurisdiction.
Holding and Implications
DISMISSED
The appeal by Company A is dismissed, confirming that the English courts have jurisdiction over the claims brought by Company B pursuant to the English jurisdiction clause in the swap transaction documentation.
The decision affirms the principle that where parties have multiple interrelated contracts with different jurisdiction clauses, each clause is presumed to govern disputes arising under its respective contract exclusively, absent clear language to the contrary. This preserves commercial certainty and predictability in complex financial transactions involving standard form ISDA documentation.
No new precedent was established beyond the application of existing principles to the facts. The ruling reinforces the importance of clear, separate jurisdiction clauses in multi-contract arrangements and the limited role of foreign law evidence in contractual interpretation by English courts.