Goldman Sachs International v Novo Banco SA

A contractual debt claim remains a civil and commercial matter even where its factual background includes foreign regulatory measures. The court considers the subject matter of the claim, not a defence based on public-law acts. A statutory transfer recognised under the European resolution regime may cause the transferee to become party to an existing exclusive jurisdiction agreement. A later foreign administrative ruling is not automatically recognised unless it is itself a transfer or involves the exercise of resolution powers provided for by the applicable directive. Where jurisdiction is conferred by the Judgments Regulation and an exclusive jurisdiction clause, a case-management stay requires rare and compelling, exceptionally strong grounds.

Oak Finance Luxembourg S.A. lent approximately US$835 million to Banco Espírito Santo S.A. under a facility agreement governed by English law and containing an exclusive English jurisdiction clause. Following the Bank of Portugal’s creation of Novo Banco S.A. as a bridge bank, the August 2014 resolution decision transferred BES’s liabilities except specified excluded liabilities.

The claimants, as assignees of Oak’s rights, sued Novo Banco for repayment. Novo Banco disputed jurisdiction, relying principally on a later December 2014 Bank of Portugal ruling stating that the Oak liability had not been transferred. It also invoked non-justiciability, comity and case management. The central issues were whether the claims fell within the Judgments Regulation, whether Novo Banco had agreed to the jurisdiction clause, and whether the proceedings should be declined or stayed.

1. Jurisdiction under the Judgments Regulation. The claims were debt claims founded on private-law rights under the facility agreement and therefore concerned civil and commercial matters within Article 1(1). The December decision was background or a possible defence, not part of the claim. Even if the claim arose from public power, it was not brought against the public authority exercising that power.

2. Agreement to jurisdiction. Whether Novo Banco succeeded to BES’s rights and obligations was governed by English law. At the jurisdiction stage the court applied the better-argument or relative-plausibility standard, rather than a balance of probabilities. The claimants had the better argument that the August decision transferred the facility liability to Novo Banco. Novo Banco consequently became party to the facility agreement and its exclusive jurisdiction clause.

3. Effect of the December decision. The court held, alternatively, that the claimants had the better argument that the December decision did not require recognition under Article 66. Article 66 concerned a transfer, including the forms of transfer contemplated by Article 40. The December decision purported to declare that no transfer had occurred; it was neither a transfer nor a re-transfer. Nor did it involve the exercise of a resolution power provided for by the directive. The EBRRD did not require recognition of every domestic administrative act effective under the law of the resolution authority’s state.

4. Act of state and non-justiciability. The court was not adjudicating on the validity of a Portuguese decision. It was determining its effect under English law. The Bank of Portugal was acting as an EBRRD resolution authority, not as a state actor for the purposes of the relevant doctrine.

5. Stay. The court retained an inherent case-management power to stay proceedings, but such a stay was available only in rare and compelling cases, requiring exceptionally strong grounds where an exclusive English jurisdiction clause existed. No such circumstances were established. The Portuguese proceedings concerned the validity of the December decision, whereas the English proceedings concerned repayment of the debt.

6. Novo Banco’s applications to set aside or stay both proceedings were dismissed.