UBS AG & UBS Securities Llc v HSH Nordbank AG

A jurisdiction agreement must be construed objectively in the context of the transaction as a whole. Although jurisdiction clauses are ordinarily construed widely and may include pre-contractual misrepresentation claims, commercial parties to a multi-contract transaction are not normally taken to intend identical claims to be governed by inconsistent jurisdiction agreements.

A standard-form exclusive English jurisdiction clause in the agreement recording the issue of notes used as consideration did not extend to claims that the wider investment transaction, and the purchase of different notes, was induced by misrepresentation. The clause did not govern a dispute concerning agreements at the commercial centre of the transaction where there was no dispute about the issue, sale or performance of the notes to which the English clause related.

UBS sought negative declarations in England in anticipation of proceedings brought by HSH in New York. The dispute arose from a complex collateralised debt obligation transaction. HSH alleged that UBS had mis-sold the investment and had mismanaged the reference pool underlying the notes purchased by HSH.

Walker J held that the English court lacked jurisdiction. UBS appealed. Its case was that an exclusive English jurisdiction clause in a Dealer’s Confirmation, under which HSH issued medium-term notes used as consideration for the investment, covered the misrepresentation claims. HSH contended that the claims concerned the purchase and management of the collateralised debt obligation notes and the Reference Pool Side Agreement, whose documentation pointed to New York.

The central issue was whether the claims fell within the Dealer’s Confirmation jurisdiction agreement for the purposes of Article 23 of the Brussels I Regulation.

1. Appeal dismissed. The English court had no jurisdiction under Article 23 of the Brussels I Regulation. Lord Collins gave the judgment, with Ward and Toulson LJJ agreeing.

2. The court accepted that jurisdiction clauses should ordinarily be construed widely and generously, and that wording such as “arising out of” or “in connection with” will usually encompass a claim for pre-contractual misrepresentation. But the essential task remained the construction of the particular agreement in the context of the entire contractual package.

3. Where related contracts contain potentially overlapping jurisdiction clauses, the parties are presumed to have acted commercially. They are not normally to be taken to have intended substantially identical claims to be subject to inconsistent exclusive English and non-exclusive New York jurisdiction agreements. The relevant clauses must therefore be read by reference to the role of their respective agreements in the transaction.

4. The Dealer’s Confirmation was a standard-form bond-issue document. It recorded the issue of the Kiel medium-term notes, which were used instead of cash as consideration for the purchase of the NS4 notes and were immediately transferred to NS4. There was no dispute concerning the issue, sale, performance or alleged misrepresentation of the Kiel notes.

5. The alleged misrepresentations concerned the quality and management of the Reference Pool and the inducement to purchase the NS4 notes. The core agreements for that investment were the Letter Agreement, the offering documentation and the Reference Pool Side Agreement. A commercially sensible construction did not place those claims within the English clause merely because the consideration took the form of the Kiel notes. The clause therefore did not cover the negative declarations sought by UBS.

6. The alternative forum non conveniens application did not arise. The court noted, without deciding the point, the substantial obstacles to a stay despite an English jurisdiction agreement and the unresolved question whether the Brussels I Regulation permits such a stay where jurisdiction is founded on Article 23.

1. Court of Appeal (Civil Division). UBS’s appeal was dismissed. The court upheld the conclusion that the English court lacked jurisdiction over the claims under Article 23 of the Brussels I Regulation.
2. High Court, Queen’s Bench Division, Commercial Court (Walker J). Held that the English court did not have jurisdiction in respect of UBS’s claims and did not determine the alternative forum non conveniens application.