Regione Piemonte v Dexia Crediop SpA

On an application under CPR 13.3, a real prospect of successfully defending the claim is necessary but may not be sufficient. The court must exercise its discretion in all the circumstances, applying the overriding objective. Promptness is a mandatory and important consideration.

The court weighs the nature and justification of the delay, the strength of the defence and the justice of the case. A marked and unjustified delay may outweigh even a real prospect of success. Relief from sanctions principles, including the three-stage approach in Denton, inform that exercise.

A foreign public authority alleging that a contract governed by English law was beyond its capacity must provide cogent evidence of the applicable foreign law. A violation of foreign public or administrative law does not, without more, establish an absence of private-law capacity.

An Italian regional authority entered into English-law derivative transactions with banks in connection with two bond issues. The agreements submitted the parties to the jurisdiction of the English courts. After the authority deliberately declined to acknowledge declaratory proceedings, Cooke J entered default judgments declaring the transactions valid, binding and enforceable.

The banks subsequently claimed sums due under the transactions. Shortly before their summary judgment applications were heard, the authority applied to set aside the default judgments. Eder J refused that application and entered monetary judgments for the banks: [2013] EWHC 1994 (Comm).

The authority sought permission to appeal. It relied principally on alleged non-compliance with Italian law, want of capacity, illegality, want of authority, fiduciary duties, misrepresentation, secret profits and its asserted lack of qualified-investor status. The central issue was whether Eder J had erred in refusing to set aside the default judgments and in granting summary judgment.

1. Permission to appeal refused. Eder J was entitled to refuse to set aside the regularly obtained default judgments and to grant summary judgment. The extent and character of the authority’s delay alone provided good grounds for refusing relief. The authority had deliberately ignored properly served English proceedings despite agreeing to English law and jurisdiction. Its attempted use of an Italian administrative process did not justify that course.

2. CPR 13.3 confers a discretion. An applicant must show a real prospect of successfully defending the claim or another good reason for setting the judgment aside. Satisfaction of that threshold does not compel relief. Promptness is a mandatory and important consideration. The court must weigh the nature and justification of the delay, the strength of the proposed defence and the justice of the case. The stronger the defence and justification, the more readily delay may be excused. A marked and unjustified lack of promptness may nevertheless outweigh a real prospect of success.

3. The overriding objective and the considerations in CPR 3.9 apply to the exercise of the CPR 13.3 discretion. The approach in Denton v TH White Ltd [2014] EWCA Civ 906 was therefore relevant. The court considers the seriousness and significance of the default, the reason for it and all the circumstances. Efficient and proportionate litigation and compliance with rules, directions and orders have particular, though not paramount, importance.

4. The authority had a realistic prospect of showing limited non-compliance with Italian regulation, particularly concerning the synthetic investment component and possibly the balance of the collar. That did not establish that it lacked capacity or that the transactions were void. Foreign-law evidence characterised the alleged defects as regulatory violations and did not establish an absence of private-law capacity. Italian administrative decisions had also rejected the attempted administrative cancellation.

5. The proposed illegality, want-of-authority, fiduciary-duty, secret-profit, mis-selling and qualified-investor defences lacked sufficient cogency. The parties acted as principals, and the authority was a major public body with legal advisers. Its contractual representations concerning independent decision-making, non-reliance, authority and capacity to assess risk generated contractual estoppels in accordance with Springwell Navigation Corporation v JP Morgan Chase Bank & Ors [2010] EWCA Civ 482.

1. Court of Appeal (Civil Division): Permission to appeal was refused. The court upheld the refusal to set aside the default judgments and the grant of summary judgment: [2014] EWCA Civ 1298.

2. High Court, Commercial Court: Eder J refused to set aside the earlier default declaratory judgments and entered monetary judgments for the banks: [2013] EWHC 1994 (Comm).

3. High Court, Commercial Court: Cooke J had entered default judgments declaring the derivative transactions valid, binding and enforceable. No neutral citation is stated in the judgment.