High Court Reaffirms Primacy Of ISDA Master Agreement Jurisdiction Clause Post-Brexit

• Published date: 04 July 2023
• Subject Matter: Corporate/Commercial Law, Contracts and Commercial Law
• Law Firm: Herbert Smith Freehills
• Author: Damien Byrne Hill, Ceri Morgan and Nic Patmore

The High Court's judgment in Dexia Crediop SpA v Provincia di Brescia [2023] EWHC 959 (Comm) confirms that an English jurisdiction clause within standard form ISDA documentation will not readily be displaced.

The High Court gave effect to an English jurisdiction clause in an ISDA Master Agreement, finding that the claims related to the validity and enforceability of either the ISDA Master Agreement or the underlying swaps. The court rejected the suggestion that the relevant claims for declaratory relief arose out of a connected settlement agreement between the parties (which did not contain a jurisdiction clause and was governed by Italian law).

This decision is consistent with the trend of the English courts to give effect to ISDA standard form jurisdiction clauses, as set out in the previous decisions of BNP Paribas SA v Trattamento Rifiuti Metropolitani SPA [2019] EWCA Civ 1740 (read our blog post) and Deutsche Bank AG v Comune di Savona [2018] EWCA Civ 1740 (read our blog post). These judgments were made pursuant to Article 25 of the Recast Brussels Regulation, which governs the question of jurisdiction where there has been an agreement between the parties under EU law. The present case (together with the recent decision in Deutsche Bank v Brescia [2022] EWHC 2859 (Comm)) is one of the first to look at the question of competing jurisdiction clauses in an ISDA context since the UK left the EU, deciding the issue under the UK's domestic rules on jurisdiction agreements.

Helpfully for financial institutions, the English courts are continuing to demonstrate under the post-Brexit regime that they will give effect to the broad and market standard jurisdiction clauses contained in standard form ISDA documentation. This provides some degree of certainty to parties incorporating such clauses into their transactional documentation, should they need to rely on them at a later stage.

Background

The court considered the standard form ISDA Master Agreement jurisdiction clauses relating to two swap transactions entered into by Dexia and Brescia in 2006 (the Swaps).

The parties were previously involved in litigation in England and Italy concerning the Swaps, which was brought to an end by a settlement agreement. One of the provisions of the settlement agreement purported to confirm the validity of the Swaps. The settlement agreement did not contain a jurisdiction clause, but was governed by Italian law and expressly referred to the fact that the Swaps and the related...