BNP Paribas SA v Trattamento Rifiuti Metropolitani SPA (Rev 1)

Where interlinked commercial contracts contain different exclusive jurisdiction clauses, construction starts from the likelihood that each clause governs disputes arising under its own contract and particular legal relationship. Wide language in one agreement does not ordinarily capture a claim arising under another agreement with its own jurisdiction clause.

The clauses must nevertheless be construed broadly, purposively and in their commercial context. Under Regulation (EU) No 1215/2012, the scope of a jurisdiction agreement is assessed prospectively and by reference to the claim when issued. A later defence or foreign action cannot alter that analysis. An expert on foreign law may prove the foreign rules of construction, but the court construes the contract under those rules.

BNP Paribas SA sought negative declarations concerning an interest-rate swap entered into with Trattamento Rifiuti Metropolitani SPA on ISDA Master Agreement terms. The swap was governed by English law and contained an exclusive English jurisdiction clause. It had been entered into in connection with an Italian-law financing agreement, which contained an exclusive jurisdiction clause in favour of Turin.

The appellant contended that the declarations concerned the financing relationship, or fell within both clauses and were governed by the Turin clause under a conflicts provision in the swap documentation. Knowles J dismissed its jurisdiction challenge: [2018] EWHC 1670 (Comm). The appeal concerned the construction and operation of the competing clauses under Article 25 of the Regulation, and whether the individual declarations related to the swap.

1. Appeal dismissed. Hamblen LJ, with whom Flaux and Asplin LJJ agreed, upheld the conclusion that the declarations fell within the English jurisdiction clause in the ISDA Master Agreement and not the Turin clause in the financing agreement.

2. Foreign-law experts may prove the relevant rules of contractual interpretation. They may not give evidence on what a foreign court would decide the contract means. Article 1362 of the Italian Civil Code required primary attention to the literal wording. There was no material difference from the applicable English approach.

3. Where related contracts contain competing jurisdiction clauses, the court must construe them broadly, purposively and commercially, in the context of the contractual scheme. The starting point is that a clause in one contract does not capture disputes more naturally arising under another contract with its own dispute-resolution provision. The clauses may overlap only where their language and context so provide.

4. Under Article 25 of Regulation (EU) No 1215/2012, each clause concerned a distinct particular legal relationship. The financing agreement governed the background lending relationship, whereas the ISDA documentation governed the specific swap relationship. The scope of each clause was assessed prospectively and by reference to the English claim when issued. A later Italian action, factual overlap, or a possible claim under the financing agreement could not transform a claim under the swap into one governed by the Turin clause.

5. The conflicts provision was not engaged. The agreements dealt with complementary rather than inconsistent relationships. The declarations either tracked the swap terms or followed from them. Declaration (g), however, had to be amended to remove its reference to the financing agreement and make clear that it concerned claims relating to the transaction only. Subject to that amendment, all the declarations fell within the English clause.

• Court of Appeal (Civil Division) Dismissed TRM’s appeal and upheld the English court’s jurisdiction under the ISDA Master Agreement: [2019] EWCA Civ 768.
• High Court (Commercial Court) Knowles J dismissed TRM’s application to challenge jurisdiction, holding that BNPP had much the better of the argument that the claim fell within the English jurisdiction clause: [2018] EWHC 1670 (Comm).