Black Diamond Offshore Ltd & Ors v Fomento De Construcciones y Contratas SA

An exclusive jurisdiction clause must be construed broadly and commercially, by reference to the parties’ agreements and the transaction as a whole. Where an event of default arises directly under one contract, a jurisdiction clause in that contract governs, even if the same facts may have commercial significance under another agreement. A temporary case management stay requires an extremely strong or compelling reason where proceedings are brought under an exclusive jurisdiction clause. A claimant’s wish to use the judgment for a collateral purpose does not, without more, show that it lacks a real interest in the proceedings.

The creditors, holders of English-law notes issued by a Spanish company, brought Part 8 proceedings seeking declarations as to whether Spanish restructuring proceedings constituted an event of default under the notes. The defendant challenged the English court’s jurisdiction under CPR 11(1), arguing that the dispute was really connected with syndicated debt governed by Spanish law and a Madrid jurisdiction clause.

Alternatively, the defendant sought a temporary case management stay until the Spanish homologation proceedings were concluded. The central issues were which jurisdiction clause governed the event-of-default question and whether the pending Spanish proceedings justified delaying the English claim.

1. Jurisdiction. The exclusive jurisdiction clause in the notes was valid and applied to the event-of-default question. Jurisdiction clauses are construed widely and generously, with a presumption in favour of one-stop dispute resolution, but the parties’ intention must be determined from the agreements in the light of the transaction as a whole.
2. The approach in UBS AG and UBS Securities LLC v HSH Nordbank AG [2009] EWCA Civ 585 and Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] Lloyd’s Rep 767 did not apply. Those cases concerned one dispute potentially governed by competing jurisdiction clauses. Here, the event-of-default issue arose directly under the notes, while the Spanish homologation proceedings were free-standing, involved no defendant or lis, and were not governed by the syndicated financing agreement.
3. Even viewed through the competing-contract analysis, the notes were closer to the claim and were the commercial centre for the event-of-default issue. Any relevance of acceleration under the syndicated financing agreement was peripheral. The construction challenge therefore failed.
4. Case management stay. The court had a residual discretion to stay proceedings, but an extremely strong or compelling reason was required where the claim was brought pursuant to an exclusive jurisdiction clause. The authorities relied on, including Equitas Ltd v Allstate Insurance Co [2009] Lloyd’s Rep 227 and Jefferies International Ltd v Landsbanki Islands HF [2009] EWHC 894 (Comm), supported that approach.
5. The creditors had a real interest in obtaining certainty about their rights and whether they could accelerate the notes. Their collateral use of any English judgment in Spain did not remove that interest. A stay would delay their contractual right to an English determination, whereas no prejudice to the defendant was shown and deciding the issue in England was more likely to avoid inconsistent decisions.
6. The alternative application for a stay was refused.