Deutsche Bank AG v Comune Di Savona

Where related contracts contain different jurisdiction clauses, the clauses should receive a careful, commercially minded construction. Mutual exclusivity is desirable but remains a presumption, not an inflexible rule. A court may recognise overlapping jurisdiction if the language and contractual scheme require it.

Under Article 25 of Regulation (EU) No. 1215/2012, jurisdiction depends upon the particular legal relationship to which the parties’ agreement relates. A generic advisory relationship may be distinct from later transactions made under self-contained contracts. Claims tracking representations, non-reliance terms and risk allocations in those later contracts relate to them, even if framed as negative declarations or connected with alleged pre-contractual advice.

Deutsche Bank and Comune di Savona first entered an Italian-law advisory convention containing an exclusive Milan jurisdiction clause. They later entered interest-rate swaps under an English-law ISDA Master Agreement containing an English jurisdiction clause, non-reliance provisions and an entire agreement clause.

Following criticism of the transactions by the Italian Court of Auditors, the bank sought declarations in England concerning the swaps. Savona successfully challenged jurisdiction over declarations addressing advice, reliance, understanding, risk and liability. HHJ Waksman QC held that those matters belonged within the advisory relationship and the Milan clause: [2017] EWHC 1013 (Comm).

The bank appealed. The central issue was whether the challenged declarations related to the specific swap relationship and therefore fell within the English jurisdiction clause for the purposes of Article 25 of Regulation (EU) No. 1215/2012.

1. Appeal allowed. The English court had jurisdiction over declarations (7)–(10) and (12). The order below was set aside to that extent and Savona’s jurisdiction application was dismissed.

2. Under Article 25 of Regulation (EU) No. 1215/2012, the Convention created a generic relationship under which the bank supplied expertise concerning debt management and possible financial instruments. Clause 2(b) contemplated that any proposed and approved transaction would be governed by a separate contract. The swaps and ISDA Master Agreement therefore created a distinct, specific legal relationship governed by their own English jurisdiction clause.

3. The entire agreement clause strongly confirmed that the swap contracts were self-contained and were to be interpreted according to their terms irrespective of earlier relationships. It was not confined to excluding collateral warranties. The Convention did not expressly impose affirmative obligations concerning the particular swaps.

4. Declarations (7)–(10) precisely tracked the ISDA provisions concerning independent decision-making, non-reliance, understanding and assumption of risk, and the absence of a fiduciary or advisory relationship in respect of the transactions. Their positive counterparts would likewise concern the parties’ rights and responsibilities under the swaps. Declaration (12), as amended, merely stated the alleged consequences of the other declarations. All therefore related to the swap contracts.

5. Potentially conflicting jurisdiction clauses should preferably be construed as mutually exclusive. That is an important presumption, not an invariant rule. Courts should not adopt a convoluted construction merely to avoid overlap. In this case, however, the distinction between the generic advisory relationship and the specific swap relationship produced a mutually exclusive construction.

6. The construction of a jurisdiction clause is a question requiring the court to determine its correct meaning, rather than an evaluative exercise insulated from appellate reconsideration. The proper focus is whether the English court has jurisdiction, rather than whether its declarations might operate as defences in foreign proceedings.

7. Longmore LJ also explained, with Gross LJ’s express agreement, that foreign-law evidence on an interlocutory jurisdiction application should ordinarily be confined to material differences in applicable principles of construction. Where no such difference exists, extensive expert evidence is inappropriate. Floyd LJ agreed with both judgments.

1. Court of Appeal (Civil Division): Allowed the appeal in [2018] EWCA Civ 1740, set aside the material parts of the order below, dismissed Savona’s jurisdiction challenge and declared that the English court had jurisdiction over declarations (7)–(10) and (12).

2. High Court, Commercial Court: HHJ Waksman QC upheld Savona’s jurisdiction challenge and dismissed the claims for the disputed declarations in [2017] EWHC 1013 (Comm).