In a recent case, UBS Limited and UBS AG v Regione Calabria [2012] EWHC 699, the UK Commercial Court stayed two English claims, pursuant to Articles 27 and 28 of the Brussels Regulation (44/2001). This was on the grounds that an Italian Court was first seised of the proceedings, despite the Italian proceedings having been served against a non-existent entity described as UBS Warburg AG.  The court adopted a practical approach to the issue of the party's identity in the Italian proceedings.

The Facts

In 2002, Regione Calabria, an Italian public authority, entered into a written agreement (the Advisory Contract) with UBS Limited, an English investment Bank, and Banca Nationale del Lavoro (BNL) to perform certain services in relation to its regional debt.  The Advisory Contract provided that it was to be governed by Italian law, and to be subject to the jurisdiction of the Italian Courts.

Between 2003 and 2007, UBS Limited and its parent company, UBS AG, entered into a number of interest rate swap transactions with Regione Calabria.  The transactions were governed by an ISDA Master Agreement, which contained a clause providing that it was to be governed by English law and subject to the jurisdiction of the English Courts.

The Court of Auditors found that transactions entered into by Regione Calabria had damaged its regional budget, and as a consequence, Regione Calabria commenced proceedings in Italy against a number of Banks, including BNL, but not the UBS Limited or UBS AG.  Instead, the Summons named another corporate entity, UBS Warburg AG, a non-existent entity, as the defendant.

Subsequently, UBS Limited and UBS AG each issued proceedings in England seeking declarations of non liability in respect of any of the potential ways in which liability was being alleged against any UBS entities in the Italian proceedings.

UBS Limited and UBS AG also lodged an Appearance in the Italian proceedings, which challenged the validity of service of the Summon, and alleged that the Italian Court did not have jurisdiction.  It also addressed the merits of the claim advanced in the Summons, without prejudice to the challenges to the validity of the Summons, and the contention that the Court did not have jurisdiction.

Regione Calabria then issued its application in the English proceedings, challenging the jurisdiction of the English Court. 

Regione Cantabria contended firstly, that the Italian Court was first seised of the proceedings, involving the same case of action and involving the same parties as the English proceedings so as to engage Article 27 of the Brussels Regulation; or that in any event the Italian Court was first seised of proceedings which were related to the English proceedings so as to engage Article 28 of the Brussels Regulation. Secondly, and alternatively, that if the Italian Court was not first seised of any proceedings involving UBS Limited or UBS AG, nonetheless it was first seised of the proceedings against other banks which were defendants in the Italian Court, and that those Italian proceedings were related to the English proceedings so as to engage Article 28.  Thirdly, and in the alternative if neither Articles 27 nor 28 were engaged, nevertheless the English proceedings should be stayed pursuant to Article 23 because of the Italian jurisdiction clause in the Advisory contract.

UBS Limited and UBS AG argued that there were no proceedings against them in Italy, because the proceedings were commenced against a non-existent entity described as UBS Warburg AG.  In addition, it was submitted that there was such procedural uncertainty over the identity of the entities who Regione Calabria intended to sue, as to render invalid and a nullity both the purported service and the Summons itself.

The Decision

The UK Court stayed the two English claims. The claim by UBS Limited against Calabria was stayed pursuant to Article 27, and the claim by UBS AG was stayed pursuant to Article 28.

The UK Court found that it was reasonably clear from the content of the Summons in the Italian proceedings that the entity against which the claim was being advanced was, or included, UBS Limited.  In the event that this conclusion was wrong, UBS Limited had filed an Appearance in the Italian proceedings, which had the effect of curing any defect in service.

Although the Court did not find any evidence of a claim against UBS AG in the Italian proceedings, the judge was satisfied that the claim brought by UBS AG in the UK was related to the Italian proceedings for the purposes of Article 28 and should therefore be stayed.

The Court did not find it necessary to deal with the third argument of Regione Calabria based on Article 23 of the Brussels Regulation.

Read more: UBS Limited and UBS AG v Regione Calabria [2012] EWHC 699