Last Monday, Knowles J ruled that the English courts had jurisdiction to hear a dispute about an English law ISDA master containing the standard submission to the English courts. BNP Paribas SA v Trattamento Rifiuti Metropolitani concerned the financing by Paribas of a waste-to-energy project in Turin which is presumably not going well. The loan agreement, which specified Italian law, required the borrow to implement an interest rate hedging strategy, which was done via an English law ISDA. Paribas sought various declarations about the hedging agreement, and TRM argued this should go before the Italian courts because (a) the loan agreement specified the Italian courts for disputes relating to the loan agreement, (b) the hedging was done pursuant to an obligation in the loan agreement and (c) the swap schedule said that in the event of any conflict between the terms of the two documents, the loan agreement prevailed; and here there was a conflict… TRM argued this strongly, bringing in Italian law expert witnesses (whom the Judge decided were irrelevant). The Judge had no doubt that, quite simply, the parties had agreed that the Italian courts should hear disputes about the loan agreement, and the English courts should hear any disputes about the swaps. There was no “conflict” between the two documents. He noted:
- As a general proposition, dispute resolution provisions require certainty
- The worldwide use of ISDA documentation required consistency and certainty so that the many parties using it know where they stand (citing the very sound Briggs J – now Lord Briggs – in Lomas v Firth Rixson from 2010). ISDA masters are standard forms, and so are much less context-specific than bespoke documents, and any factual background that might imply that they did not mean what they said – such as, the parties submit to the jurisdiction of the English courts – had “a much more limited, if any, part to play”.