This appeal related to an issue that commonly arises in cases relating to interest rate swaps and other hedging arrangements. Where the contractual framework governing the underlying relationship between the parties has a jurisdiction clause that differs from the jurisdiction clause of the ISDA Master Agreement (that the parties enter in to in respect of interest rate and other swaps), which takes precedence?
In this case, the Court of Appeal found that the claim fell within the jurisdiction clause in the ISDA Master Agreement.
In dismissing the appeal on all its grounds, the Court took the opportunity to provide a clear restatement of the law on competing jurisdiction clauses:
- A jurisdiction clause in one contract was probably not intended to capture disputes more naturally seen as arising under related contracts;
- A broad purposive and commercially minded approach is to be followed;
- Where jurisdiction clauses are part of a series of agreements, they should be interpreted in light of the transaction as a whole, taking account of the overall scheme of agreements;
- It is to be recognised that sensible business people are unlikely to intend similar claims to be subject to inconsistent jurisdiction clauses;
- There is a presumption that competing jurisdiction clauses will be interpreted on the basis that each will deal exclusively with its own subject-matter and that there is to be no overlap; and
- In the event that language and surrounding circumstances make it clear that a dispute falls within the ambit of both of the competing clauses, the result may be that either clause may apply rather than one clause should apply to the exclusion of the other.
Stephenson Harwood comment
The Court of Appeal concluded that the decision that BNP Paribas’ claims fell within the English jurisdiction clause contained in the ISDA Master Agreement accorded with the commercial imperative that jurisdiction clauses provide certainty for parties, from the outset, as to where their disputes will be resolved.
Further, the decision underlines the Court’s recognition of the importance of standard terms, such as the ISDA Master Agreement, in providing consistency, certainty and predictability for parties, and their willingness to uphold them.