BNP Paribas SA v Trattamento Rifiuti Metropolitani SPA

Where related contracts contain jurisdiction clauses in favour of different countries, the clauses should be construed broadly and purposively, but in a way that allows the contracts to operate together where their subject matters differ. Standard-form ISDA documentation strongly supports certainty, clarity and predictability. Particular allegations arising after the contracts were made cannot ordinarily form part of the contractual context. At an interlocutory jurisdiction hearing, the court need only determine whether the claimant has much the better of the argument. A party cannot avoid a serious issue by declining to challenge the formal validity of a transaction while refusing to concede the declarations sought about its legal effect.

BNP Paribas sought declarations in the Commercial Court concerning an interest-rate swap entered into with Trattamento Rifiuti Metropolitani SPA under a 1992 ISDA Master Agreement. The Master Agreement was governed by English law and contained an English jurisdiction clause. A separate Italian-law Financing Agreement contained an exclusive jurisdiction clause in favour of the Court of Turin and required hedging contracts to be entered into with BNP Paribas.

TRM argued that the Financing Agreement, an alleged implied advisory contract and the surrounding circumstances displaced or restricted the English jurisdiction clause. It also argued that there was no serious issue to be tried because it did not challenge the validity of the swap or Master Agreement. The central issues were whether a serious dispute existed and how the two jurisdiction clauses should be construed.

1. Serious issue. The court held that there was plainly a serious issue to be tried. TRM was unwilling to concede the accuracy of the declarations sought. BNP Paribas was entitled to seek confirmation of rights said to arise from the agreed terms of the Master Agreement and swap.
2. Construction of the jurisdiction clauses. Jurisdiction clauses in separate contracts are matters of construction or interpretation. The court should adopt a broad and purposive approach, considering the contractual language and commercial consequences. At this interlocutory stage, BNP Paribas had to show that it had much the better of the argument.
3. The Financing Agreement’s clause concerned disputes relating to that agreement, while the ISDA clause concerned proceedings relating to the Master Agreement. The clauses could operate coherently because the parties had more than one contractual relationship. General wording in the Financing Agreement did not displace the specific English jurisdiction agreement in the ISDA documentation. There was no conflict requiring the Financing Agreement to prevail, and no basis for rewriting the contracts.
4. The use of standard-form ISDA documentation was a powerful contextual consideration. Such documentation should, so far as possible, be interpreted consistently with clarity, certainty and predictability. The particular factual allegations concerning the Hedging Strategy and the Italian proceedings were not part of the context when the jurisdiction clauses were agreed. The court respectfully preferred the approach in Dexia Crediop SPA v Provincia di Brescia to the broader contextual approach in Deutsche Bank AG v Comune di Savona.
5. The declarations were directed principally to rights and obligations arising under the Master Agreement, Schedule and Confirmation. Seeking declarations could legitimately be a means of enforcing a contractual estoppel. The fact that TRM had separately undertaken in the Financing Agreement to comply with its Master Agreement obligations did not remove those obligations from the English jurisdiction clause.
6. The court did not need expert evidence of Italian law to determine the jurisdiction application at the relevant threshold. Subject to limited drafting points, TRM’s application was dismissed.