In BNP Parabas SA v Trattamento Rifiuti Metropolitani SPA, the Commercial Court in London rejected Trattemento’s argument that BNPP was not entitled to raise proceedings in the English Courts seeking declarations in relation to Trattemento’s obligations under an English law 1992 ISDA Multi-Currency Cross Border Master Agreement. The related Financing Agreement was governed by Italian law and provided that the Court of Turin had exclusive jurisdiction.
The case explored whether an express agreement to the jurisdiction of the English Court within standard form ISDA documentation should be displaced or restricted in light of the Financing Agreement.
The Court considered the documents, the relationship between them and the focus of proceedings, and held that:
- the proceedings raised by BNPP referred only to the Master Agreement and the swap transaction, and all declarations sought to derive directly from the Master Agreement or were consequent to those declarations;
- the parties had more than one relationship, and of the two jurisdiction clauses one was concerned with the Master Agreement and one with the Financing Agreement; and
- there was no need to determine primacy of jurisdiction clauses because there was no conflict.
Importantly, and of particular interest to those involved in or securing cross-jurisdictional financings, the Court also commented that the most powerful point of context in interpreting jurisdiction clauses was the use of ISDA documentation and the ISDA jurisdiction clause within it, noting that “where commercial parties use ISDA documentation they are even less likely to intend that provisions in that documentation may have one meaning in one context and another meaning in another context”. In other words, industry standard documentation is standard documentation, and the Courts will view it as such.
This reluctance to apply an alternative interpretation to industry standard documentation is helpful, but should be borne in mind in cross-jurisdictional financings, to ensure that the standard terms reflect accurately the parties’ beliefs and intentions.
The full decision of the Court is here: BNP Parabas SA v Trattamento Rifiuti Metropolitani SPA EWHC 1670 (Comm)
On September 10, 2018