Marme Inversiones 2007 SL v Royal Bank of Scotland Plc & Ors

Claims concerning contractual rights under swaps remain within the jurisdiction selected by an exclusive jurisdiction clause where they are legally distinct from insolvency proceedings, even though they arise from the same facts. A claim deriving directly from insolvency proceedings and closely linked to them falls within the insolvency carve-out from the Judgments Regulation and is for the insolvency court. Related actions under Article 28 require more than a shared factual background: the connection and risk of irreconcilable judgments must make it expedient to hear them together. An exclusive jurisdiction clause is a powerful factor against a stay. The possibility of inconsistent judgments may be insufficient where the proceedings pursue different legal objectives and the English court’s determination may assist the insolvency court.

Marme sought stays of declaratory claims brought by RBS and the other defendant banks concerning the contractual termination of interest rate swaps. The swaps were governed by English law and contained exclusive English jurisdiction clauses.

Marme was subject to insolvency proceedings in Spain and had brought an insolvency counterclaim under Article 61.2 of the Spanish Insolvency Law 22/2003 seeking termination of the swaps in the interests of the insolvent estate. It argued that the Spanish proceedings had priority under the Insolvency Regulation and that the English claims were related actions under Article 28 of the Judgments Regulation.

The central issues were whether the claims were related, whether the English court could or should stay them, and whether a stay was justified under the court’s inherent case-management jurisdiction.

1. The applications for stays were refused. The Spanish court had jurisdiction over Marme’s Article 61.2 insolvency counterclaim. That claim derived directly from, and was closely linked to, the insolvency proceedings. It therefore fell within the insolvency carve-out in Article 1(2)(b) of the Judgments Regulation. The exclusive English jurisdiction clause did not affect that conclusion.

2. The banks’ English claims were different. They sought declarations as to contractual rights and powers under the swaps as a matter of English law. Those claims could have been brought whether or not Marme had entered insolvency and were governed by the Judgments Regulation.

3. Under Article 28, actions are related only where they are so closely connected that it is expedient to hear them together to avoid a risk of irreconcilable judgments. The proceedings shared a factual background, but pursued different objectives: the Spanish claim concerned an insolvency remedy comparable to disclaimer of onerous contracts, while the English claims concerned contractual entitlement. The risk of inconsistent judgments was limited and insufficient to make the actions related.

4. The court did not decide whether the English court was first seised, since that issue was unnecessary to the result. Nor was it necessary to decide whether claims under the Judgments Regulation could ever be related to claims within the insolvency carve-out.

5. The discretionary factors also pointed against a stay. The exclusive jurisdiction clause was a powerful factor supporting refusal. The banks’ reliance on contractual matters in Spain was necessary to present their insolvency case and did not amount to asking the Spanish court to determine the contractual claims. The fact that the English court would in any event try Marme’s rescission claim was an additional reason to refuse a stay.

6. The inherent jurisdiction to make case-management orders remained available if circumstances changed, but there was no justification for a stay at that stage.