Guardians of New Zealand Superannuation Fund & Ors v Novo Banco, S.A.

Where a credit institution is reorganised in its home Member State, measures taken by its resolution authority must be recognised elsewhere with the effect they have under home-state law. A later administrative decision that validly clarifies the scope of an earlier bridge-bank transfer may itself form part of a reorganisation measure, even if it is not a transfer under the Directive 2014/59/EU. The relevant position is assessed when jurisdiction proceedings begin. Under Article 25 of the Regulation (EU) No. 1215/2012, genuine and clearly demonstrated consent is required to establish a jurisdiction agreement outside an incorporated contract clause. A bare confirmation that a facility was transferred does not suffice. Appeals allowed.

These conjoined appeals arose from proceedings brought by assignees of Oak Finance and by Goldman Sachs International concerning liabilities under a facility agreement with Banco Espírito Santo. The agreement contained an English jurisdiction clause. Following the establishment of Novo Banco as a bridge institution, the claimants contended that the liabilities had transferred to Novo Banco. Novo Banco relied on later decisions of Banco de Portugal stating that the liabilities had remained with Banco Espírito Santo.

Hamblen J held that the claimants had the better of the argument that the liabilities had transferred and that Novo Banco was bound by the jurisdiction clause: [2015] EWHC 2371 (Comm). The appeals concerned the effect in England of the Portuguese decisions under the Directive 2001/24/EC, the Directive 2014/59/EU and the Credit Institutions (Reorganisation and Winding up) Regulations 2004, and whether the email exchange independently established consent under Article 25 of the Judgments Regulation.

1. Disposition. The appeals were allowed. At the date the proceedings were commenced, the respondents did not have the better of the argument that Novo Banco was party to an agreement submitting the claims to the English courts.
2. Recognition of the Portuguese measures. The August decision, which established Novo Banco as a bridge institution and transferred assets and liabilities to it, was a reorganisation measure. Under Article 3 of the Directive 2001/24/EC, Article 66 of the Directive 2014/59/EU and regulation 5 of the Credit Institutions (Reorganisation and Winding up) Regulations 2004, the English courts had to give it the effect it had under Portuguese law.
3. The December decision was binding under Portuguese law unless set aside by the Portuguese administrative courts. It declared that the August decision had not transferred the Oak liability to Novo Banco. The English courts were therefore required to accept that effect. It was unnecessary to determine whether the December decision was itself a resolution measure or a retransfer under Article 40 of the EBRRD.
4. The December decision was, in any event, closely connected with the August decision and formed part of a reorganisation measure. Its purpose included clarifying the earlier measure in the context of an orderly resolution and winding-up. The broad approach to reorganisation measures in Kotnik and the principle of universal recognition supported that conclusion. Permission was granted to amend the grounds to raise this point.
5. Permission to rely on the September and December 2015 decisions was refused. Jurisdiction was assessed by reference to 26 February 2015, when proceedings began. The later decisions were also introduced too late and their effect under Portuguese law had not been adequately investigated.
6. Article 25. The email exchange did not establish a jurisdiction agreement. In the absence of an incorporated contractual clause, there had to be genuine consent, clearly and precisely demonstrated. The confirmation that the facility agreement had transferred did not refer to the jurisdiction clause and did not show a conscious intention by Novo Banco to submit to English jurisdiction. The requirement stated in Salotti was not satisfied.
7. Sales LJ added alternative reasoning. He considered that EU principles of legal certainty and protection of legitimate expectations constrained retrospective changes where parties had acted on the earlier decision. On a narrower analysis, he would also have treated the December decision as a retransfer satisfying Article 40(7). Gloster LJ disagreed with aspects of that reasoning, but the disagreement did not affect the result.

1. Court of Appeal (Civil Division) allowed the appeals and held that the claimants did not have the better of the argument that Novo Banco was bound by the English jurisdiction clause.
2. High Court of Justice, Queen’s Bench Division, Commercial Court Hamblen J held that the claimants had the better of the argument that the Oak liability had transferred to Novo Banco and that the English courts had jurisdiction: [2015] EWHC 2371 (Comm).