The Italian Job: Court Of Appeal Provides Guidance On Competing Jurisdiction Clauses

The Court of Appeal recently considered the question of competing jurisdiction clauses. The dispute in Deutsche Bank AG v. Comune di Savona1 concerned interest rate swaps entered into by the defendant with Deutsche Bank (the Bank) pursuant to an ISDA Master Agreement which contained an exclusive jurisdiction clause in favour of the English court (the ISDA). Prior to entering into the ISDA, the parties had also entered into another agreement under which the Bank was to provide certain advice (the Convention). The Convention contained an exclusive jurisdiction clause in favour of an Italian court. The issue before the Court of Appeal was whether certain declarations sought by the Bank in English proceedings under the ISDA were in fact subject to the exclusive jurisdiction of the Italian court because they fell within the scope of the Convention and not the ISDA.

The Appeal Court recognised the difficulty in construing competing jurisdiction clauses. Each case will require careful analysis of principles of construction and, where European law is in play, the "particular legal relationship" between the parties for the purposes of Article 25 of the Recast Brussels Regulation2 to determine jurisdiction. The court noted the presumption that parties will not be taken to have intended a particular dispute to fall within the scope of two inconsistent clauses, but concluded there will be cases "where it is genuinely difficult, or actually impossible, to assign a particular dispute to one jurisdiction clause or another".

The court also called for the Commercial Court Users' Committee to consider changes to the Commercial Court Guide in order to restrict the use of foreign law expert evidence on interlocutory applications.

Facts

In March 2007, an Italian local authority (Savona) entered into an agreement (known as the Convention) with the London branch of the Bank, pursuant to which the Bank agreed to provide advice and support to Savona in relation to its debts and choice of financial instruments. The Convention was governed by Italian law and conferred jurisdiction on the court of Milan. In June 2007 the Bank and Savona entered into the ISDA, which included an English governing law and English court jurisdiction clause. Savona subsequently executed two interest rate swap transactions (the Transactions), with confirmations stating that the Transactions were subject to the terms of the ISDA.

In June 2016, the Bank commenced proceedings in the Commercial...