Depfa Bank Plc v Provincia Di Pisa

Article 22(2) of the Brussels I Regulation applies only where proceedings are principally concerned with the validity of decisions of an entity’s organs. The court must examine both the claim and the defences and make an overall classification of the proceedings. The exception to ordinary jurisdiction must not be construed broadly. A good arguable case that a public body’s decisions were invalid does not, by itself, establish exclusive jurisdiction if the proceedings also concern contractual enforceability, capacity, ultra vires issues, misrepresentation, non-disclosure or mis-selling. The court must also consider whether jurisdiction in the entity’s state of seat is clearly required for the sound administration of justice. Where parallel administrative and civil proceedings in that state may themselves produce conflicting decisions, declining the contractually chosen jurisdiction may not achieve that objective.

Depfa Bank plc and Dexia Crediop SpA brought claims against an Italian local public body concerning interest rate swap agreements governed by English law and subject to exclusive English jurisdiction clauses. The Defendant challenged jurisdiction under article 22(2) of the Brussels I Regulation, arguing that its decisions to enter into the swaps were invalid under Italian public law and that the Italian courts therefore had exclusive jurisdiction.

The challenge raised issues concerning the scope of article 22(2), the relevance of intended defences, the Defendant’s capacity and powers, and the effect of related proceedings before the Italian Administrative Court. The central question was whether the claims were principally concerned with the validity of the Defendant’s organ decisions.

1. The applications were dismissed. The Defendant had not established that the Italian courts had exclusive jurisdiction under article 22(2) of the Brussels I Regulation.
2. Following BVG v JP Morgan [2010] EWCA Civ 390, the words “proceedings which have as their object” mean proceedings principally concerned with the relevant matter. Article 22 is an exception to the general jurisdictional rule and must not be interpreted more broadly than its objective requires. The court must consider the nature of the claim and defences and make an overall classification.
3. The Defendant had a good arguable case that the alleged breaches of Italian public law raised issues of capacity and ultra vires. The evidence disclosed significant disagreement between the Italian law experts, and the authorities relied upon by the Claimants did not compel a contrary conclusion.
4. Nevertheless, the proceedings were likely to involve further issues, including disclosure of implicit costs, misrepresentation, non-disclosure, failure to advise and mis-selling. The factual investigation required for those issues could not be isolated from the capacity and ultra vires arguments. The proceedings were therefore principally concerned with the validity and enforceability of the Swap Contracts, rather than solely with the validity of the Defendant’s decisions.
5. It was not clear that trial in Italy was required for the sound administration of justice. The Italian two-track system could itself generate parallel administrative and civil proceedings and a risk of irreconcilable judgments. The real dispute concerned the application of Italian public-law provisions to derivatives, alleged breaches, and the contractual consequences, rather than the Defendant’s internal decision-making procedures.
6. The issue whether article 22(2) applied to decisions of public bodies was not decided because it was unnecessary to do so.