High Court provides welcome clarity on English jurisdiction clause in 1992 ISDA Master Agreement
Introduction
In its recent judgment in Dexia SA v Comune di Torino [2025] EWHC 1903 (Comm), the English High Court provided welcome clarity on the construction of the English jurisdiction clause in an English law 1992 ISDA Master Agreement ("MA"). Those operating in the derivatives sphere will be aware that the English jurisdiction clause at section 13(2) of the 1992 ISDA MA is drafted by reference to a UK statutory definition of "Contracting State". The definition of "Contracting State" has changed over time, including as a result of Brexit and, most recently, the accession of the UK to the Hague Judgments Convention 2019 ("Hague 2019"). In this judgment, the High Court concluded that where the MA is expressed to be governed by English law, section 13(2) is a non-exclusive English jurisdiction clause, save where a matter involves a "Contracting State" court, in which case it is an exclusive English jurisdiction clause. "Contracting State" is now defined to include jurisdictions that are signatories to the Hague Convention on Choice of Court Agreements 2005 ("Hague 2005") and Hague 2019.
The parties and the background facts
The Claimant, Dexia S.A ("Dexia") is a company incorporated in France. The Defendant, Comune di Torino ("Torino"), is an Italian Municipality.
The claim concerns 11 interest rate swap transactions entered into between 2001–2006 (the "Transactions"). The Transactions were aimed at hedging Torino's interest rate exposure and reducing its indebtedness under long term variable rate bonds in the amount of EUR400m. The Transactions were entered into pursuant to an English law 1992 ISDA MA, a bespoke schedule and individual trade confirmations.
In June 2024, Torino issued proceedings in Turin, Italy, in relation to the Transactions seeking, inter alia, damages for breaches of the Transactions, a declaration that the Transactions were void under Italian law, and termination of the extant Transactions (the "Italian Proceedings").
Dexia challenged the jurisdiction of the Italian Court and denied all of Torino's claims in the Italian Proceedings.
In October 2024, Dexia commenced English Court proceedings, seeking declarations as to the validity and enforceability of the Transactions, plus summary judgment in respect of a declaration that the Transactions were subject to an exclusive English jurisdiction clause.
Torino did not appear at the hearing of Dexia's application. The Court characterised this absence as "deliberate and voluntary" and considered it appropriate to hear Dexia's application. As part of its assessment as to whether Torino had any realistic prospect of succeeding in a defence to the application, the Court considered the arguments Torino had made on the interpretation of section 13(2) in the Italian Proceedings.
Section 13(2) – English jurisdiction clause
Section 13(2) provides:
"… With respect to any suit, action, or proceedings relating to this Agreement ("Proceedings"), each party irrevocably:-
(i) submits to the jurisdiction of the English Courts, if this Agreement is expressed to be governed by English law…
Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or re-enactment thereof for the time being in force) nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction'."
Arguments considered by the Court
There were several arguments considered by the Court.
The Court considered whether section 13(2) should be given a narrow interpretation, with the result that some of the relief sought by Torino in the Italian Proceedings would fall outside the scope of the provision. The Court rejected this argument – construction of the provision is a matter for the proper law of the contract, English law, and under English law a jurisdiction clause is to be construed broadly.
The Court also considered, but was unconvinced by, an argument that Torino could not actually agree to an English jurisdiction clause, since the Transactions concerned matters of public finance, and these were 'non-disposable' matters under Italian law.
This article focuses on the Court's interpretation of section 13(2).
Arguments on the interpretation of section 13(2)
Mr Justice Butcher adopted a wide interpretation of section 13(2), which he considered covered non-contractual and collateral disputes arising out of the Transactions. The judge went on to consider whether an assessment of whether a state is a "Contracting State" depends on the terms of section 1(3) of the Civil Jurisdiction and Judgments Act 1982 ("CJJA") at the time of any litigation or the time of the underlying contract. The judge concluded the relevant definition was the version of section 1(3) in force at the time of any litigation. The judge noted that the reference to the statutory definition of "Contracting States" in the CJJA includes the wording "or any modification, extension or re-enactment thereof for the time being in force". Mr Justice Butcher considered this clearly signalled that it was intended to be an evolving definition.
The judge also considered Torino's related argument (made in the Italian Proceedings) that Italy is not a Contracting State because section 1(3) no longer refers to the Lugano or Brussels Convention and Hague 2005 does not apply to the Transactions in question as they predated Hague 2005 coming into force.
Mr Justice Butcher proceeded on the basis that Hague 2005 did not apply to this dispute, but rejected Torino's interpretation. Instead, he set out his "simpler" interpretation of clause 13(b): "Whether a state is a 'Contracting state' for the purposes of clause 13(b) and thus falls within the ambit of exclusivity for English jurisdiction, does not depend on whether the identified Convention is applicable to the dispute under the relevant transactions but only on whether that state is a party to, or is bound by, that Convention. Had it been intended that the question of whether a state was a Contracting State depended on whether the Convention was applicable to the dispute under the relevant transaction, it could have been specified but it is not" (emphasis added).
The judge also rejected an argument that the words "in the application of the provision in relation to" in s1(3) CJJA had significance in the construction of the jurisdiction clause.
As the judge observed, Italy has been within the definition of "Contracting States" from the outset of the Transactions, but for changing reasons.
Changing statutory definition
A complicating factor when construing this provision is that the statutory definition of "Contracting States" as defined in section 1(3) of the CJJA has changed over time, in particular as a result of Brexit.
Historically, the statutory definition included references to the Lugano Convention and the Brussels Convention1. Following the end of the Brexit transition period, these treaties were no longer applicable in the UK (save in legacy cases). The CJJA has been updated accordingly.
Other developments in the private international law sphere were reflected in the statutory definition, including the UK's accession to Hague 2005 and, recently, Hague 2019.
Decision
The Court ultimately granted Dexia summary judgment on parts of its claim against Torino, on the basis that Torino had no defence which stood a realistic prospect of success.
Comment
This decision provides helpful clarification on the construction of a widely used jurisdiction clause.
This clarification is also timely, given that Hague 2019 came into force in the UK on 1 July 2025, and section 1(3) CJJA has been updated to include a reference to this Convention in the definition of "Contracting States". Consistent with the approach adopted by the Court in this decision, where proceedings involve states that are parties to Hague 2019 or Hague 2005 in an English law MA, section 13(2) would be construed as an exclusive English jurisdiction clause.
The status of the Italian Proceedings in light of this High Court judgment is unclear.
