Cinnamon European Structured Credit Master Fund v Banco Commercial Portugues SA

For the purposes of art 23 of the Brussels Regulation, a jurisdiction agreement must demonstrate clearly and precisely that the parties consented to jurisdiction in derogation of the defendant’s domicile. On an interim application, the claimant must have a much better argument than the defendant that the formal requirements are satisfied. Once that threshold is met, the scope of the agreement is determined on the ordinary good arguable case standard.

Closely connected contractual documents forming part of one commercial transaction may be read together. A wide clause covering disputes arising “in connection with” an agreement may extend to disputes under a related document, particularly where the parties can reasonably be taken to have intended disputes arising from their relationship to be determined in one forum. A service-of-process clause may also, depending on its wording and context, amount to a non-exclusive jurisdiction agreement.

Cinnamon acquired residual profit interests in a Portuguese mortgage securitisation. It brought claims against BCP under a Representation Letter and a Securities Purchase Agreement, alleging that BCP had acted improperly as servicer and had given inaccurate warranties.

BCP, domiciled in Portugal, applied under CPR 11 for a stay of the Servicer Claim. The Vendor Claim was no longer challenged. Cinnamon relied on article 23 of Council Regulation (EC) No 44/2001, principally on the jurisdiction clause in the Securities Purchase Agreement and alternatively on the service-of-process clause in the Representation Letter. The central issue was whether the English court had jurisdiction over the Servicer Claim.

1. Application dismissed. Cinnamon had the better argument that the requirements of article 23 of Council Regulation (EC) No 44/2001 were satisfied. Both the Servicer Claim and the Vendor Claim could therefore continue in England.
2. Article 23 required strict compliance with its formal requirements because the provision derogated from the ordinary jurisdictional rule based on domicile. On an interim application, Cinnamon had to show a much better argument than BCP that there was a jurisdiction agreement and that it satisfied one of the formal requirements in article 23. The scope of the agreement was then a matter for the ordinary good arguable case test.
3. The Representation Letter and the Securities Purchase Agreement were entered into on the same day, by the same parties, concerning the same transaction, and referred to each other. They were therefore inextricably linked and it was artificial to construe them as wholly independent documents.
4. Clause 14 of the Securities Purchase Agreement was a non-exclusive jurisdiction clause. Its reference to disputes arising “in connection with” the agreement was sufficiently wide to include disputes under the closely related Representation Letter. The court applied the commercial presumption identified in Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40; [2007] 4 All ER 951, that rational commercial parties ordinarily intend disputes arising from their relationship to be determined by the same tribunal.
5. The court rejected the submission that “in connection with” was confined to pre-agreement matters such as misrepresentation. The non-exclusive character of clause 14 and its provision for proceedings in other jurisdictions did not require a narrower construction.
6. Alternatively, clause 10 of the Representation Letter contemplated proceedings in England concerning disputes arising from the Letter and, properly construed in context, amounted to a non-exclusive choice of jurisdiction agreement. Deutsche Bank AG v Sebastian Holdings Inc [2009] EWHC 2132 (Comm) did not establish that a service-of-process clause could never confer jurisdiction; it only supported the proposition that such a clause does not do so automatically.