The Commercial Court decided that Barclays Bank plc v Ente Nazionale di Previdenza ed Assistenza dei Medici e Degli Odontoiatri ("ENPAM") was "one of those rare cases" in which questions of jurisdiction and summary judgment could be decided at the same time, and found in favour of Barclays on both issues. The Court's consideration of the jurisdictional issues raised will be of interest to parties facing the possibility of litigation in more than one country.
The Italian pension fund ENPAM manages a fund for the benefit of its members (surgeons and orthodontists). It is governed by statutory provisions which require its investments to be low risk, to guarantee full repayment of capital and to allow recoupment of the original investment at any time.
In 2007 ENPAM entered into a transaction with Barclays pursuant to which it exchanged fund assets for €140million of securities in the form of credit-linked notes called the "Ferras CDO Securities". The asset exchange agreement included an exclusive English jurisdiction clause.
ENPAM suffered a major loss on the transaction. In June 2014 it began proceedings against Barclays in the Court of Milan, asserting that the Ferras CDO Securities were inappropriate to its investment objectives and that Barclays had advised it in a way which breached the principle of good faith and other provisions of Italian law. ENPAM's main claim in Italy was for €96 million in respect of "pre-contractual and extra-contractual" liability arising from the transaction. It also brought a secondary claim for restitution, asserting that the transaction itself was a nullity.
Barclays issued proceedings in London in September 2014 for a declaration that the Italian proceedings breached the exclusive jurisdiction clause, along with an indemnity and damages. In April 2015 ENPAM applied for an order that the English court should cede jurisdiction because the Milan court was first seised. In May 2015 Barclays applied for summary judgment on the basis that ENPAM had no real prospect of defending its claim for breach of the exclusive jurisdiction clause.
ENPAM's jurisdictional challenge was brought on the basis that (i) the Italian proceedings involved the same cause of action as the London proceedings, so that the English court was bound to decline jurisdiction in accordance with Article 27 of the Brussels Regulation; alternatively (ii) the two actions were related for the purpose of Article 28 of the Brussels Regulation and the English Court should exercise its discretion to stay the proceedings. Both sets of proceedings were commenced before 10 January 2015, so the recast Brussels Regulation, which came into force on that date, did not apply.
As to Article 27, the Court held that the two sets of proceedings were not mirror images of each other and did not have the same object: the aim of the English proceedings was recovery of damages for breach of the jurisdiction clause, whereas the aim of the Italian proceedings was damages in tort and restitution on the basis of nullity of the substantive agreements. It is well established (and reinforced in the recast Brussels Regulation) that a jurisdiction clause is separable from an agreement as a whole. Accordingly, the challenge to the validity of the contracts in Italy did not mirror the claim in respect of the jurisdiction clause in England. The fact that the two sets of proceedings involved common issues was not sufficient to engage Article 27, so the Court was not bound to decline jurisdiction.
It was agreed that the two sets of proceedings were related for the purpose of Article 28, but the Court was not prepared to exercise its discretion to stay proceedings. In reaching this decision it relied on (i) the exclusive jurisdiction clause, which it said was "a powerful factor" in support of refusing a stay, and; (ii) the fact that the claim would be resolved more quickly in England than in Italy.
Having decided that it did have jurisdiction, the Court considered whether to deal with Barclays' summary judgment application at the same time. It acknowledged that this would only be appropriate in rare cases, but decided to do so on the basis that both parties were prepared to deal with the issue, there was enough time to do so and it was sensible to avoid the cost of a second hearing. The Court awarded Barclays summary judgment in respect of all its claims except the claim for an indemnity, on the basis that the indemnity clause in question was not sufficiently clear to be dealt with summarily.
The position as to exclusive jurisdiction clauses has changed significantly since January 2015 with the coming into force of the recast Brussels Regulation. Such clauses are now given priority regardless of which court was first seized. If these proceedings had been commenced after January 2015, the end result would have been the same, but the means would have been somewhat more straightforward. Nevertheless, the Court's consideration of when proceedings have "the same cause of action" and when to exercise its discretion to stay proceedings will continue to be relevant to cases involving the recast Regulation. This case provides a useful insight into the way Courts will continue to deal with these difficult questions, and highlights the importance of ensuring that jurisdiction clauses are carefully drafted so that they adequately protect the parties' needs.