JPMorgan Chase Bank NA & Anor v Berliner Verkehrsbetriebe (BVG) & Anor

Exclusive jurisdiction under Article 22(2) of the Council Regulation No. 44/2001 depends on the proceedings’ principal subject matter, assessed by an overall classification of the litigation. The court may consider a likely defence, including an ultra vires challenge, and must distinguish a principal subject from a preliminary or incidental issue. A potentially dispositive Article 22(2) issue is relevant but does not automatically determine jurisdiction. Article 22(2) must be construed strictly, having regard to its purpose of preventing conflicting decisions about the validity of corporate-organ decisions. Where the claim principally concerns enforcement of a commercial agreement and related misrepresentation or advisory issues, an ultra vires defence may remain preliminary, even if important and potentially dispositive. The parties’ jurisdiction agreement therefore remains effective unless the Article 22(2) issue is the principal subject of the proceedings.

JPMorgan claimed approximately US$112 million from BVG under a complex swap transaction containing an English jurisdiction clause. BVG contended that the swap was ultra vires under German law and also advanced allegations concerning incorrect advice, misrepresentation, non-disclosure and breach of a consultancy agreement. BVG applied under Articles 22(2) and 25 of the Council Regulation No. 44/2001, arguing that the German courts had exclusive jurisdiction because BVG had its seat in Germany. The English court had been seised first, and the German proceedings were stayed pending this jurisdiction decision. The central issue was whether the English proceedings were principally concerned with the ultra vires issue.

1. Application dismissed. The court retained jurisdiction over the proceedings.
2. Article 22(2) is concerned with the subject matter of the proceedings, not merely the claimant’s pleaded claim. The court may consider a defence which is plainly likely to be raised. That conclusion follows from the wording and purpose of Article 22(2), including the policy of avoiding conflicting judgments about the validity of decisions of a company’s organs.
3. The expression “principally concerned with” requires an overall classification of the litigation. The court must stand back, consider all aspects apparent from the materials, and ask whether the Article 22(2) issue is the principal subject matter or merely preliminary or incidental. A potentially dispositive issue is a relevant factor, but it is not automatically decisive. Article 22 is an exception to ordinary domicile-based and agreed jurisdiction and must be construed strictly.
4. Article 22(2) is not confined to internal disputes between a legal person and its officers or members. Its language and purpose do not support that restriction. However, the provision applies only where the proceedings are principally concerned with the validity of an organ’s decision under the applicable company law or rules governing the organ’s functioning.
5. Viewed overall, the proceedings principally concerned enforcement of the swap and BVG’s allegations about the advice and contractual dealings leading to it. The German-law ultra vires issue was important and potentially dispositive, but remained a preliminary issue. The dispute affected only the parties and did not present the wider risk of conflicting decisions about the composition or future decisions of BVG’s organs which had been material in Speed Investments Ltd v Formula One Holdings Ltd [2005] 1 WLR 1936.
6. The court declined the alternative proposal to determine or stay only the ultra vires issue. In light of the overall conclusion, Article 22(2) did not require that issue to be decided exclusively by the German courts.