On 25 July 2025 Butcher J handed down a decision granting summary judgment on Dexia’s claims for declarations regarding the English court’s exclusive jurisdiction over disputes arising under a 1992 ISDA Master Agreement.
The judgment will potentially be of significance to parties holding derivatives entered into under ISDA Master Agreements governed by English law, in particular the 1992 standard form. Butcher J rejected Torino’s case, advanced in parallel Italian proceedings, that the English courts had ceased to have exclusive jurisdiction over disputes arising out of such Master Agreements following Brexit, which would have overturned the long-held market understanding of such clauses.
The judgment is the latest in a saga spanning over a decade relating to interest rate swaps and other derivatives entered into between major financial institutions and Italian local authorities prior to the Global Financial Crisis. Following the Court of Appeal’s decision in Venezia, Italian local authorities have generally ceased to participate in English proceedings and instead brought parallel Italian proceedings. This has led to a series of English judgments in the absence of the defendant local authority – in particular Catanzaro, Brescia and Emilia Romagna.
Torino commencing proceeding in Italy in 2024 seeking to establish the invalidity of a series of interest rate swaps between it and Dexia entered into between 2001 and 2007. In response, Dexia brought a claim in the Financial List seeking declarations as to the validity of the swaps and affirming the exclusive jurisdiction of the English courts. It sought summary judgment on the latter.
The claims brought by local authorities in Italy generally seek to construe the English jurisdiction clauses narrowly so as not to cover advisory duties. These arguments have been consistently rejected in England, and Butcher J found that Torino’s also had no real prospect of success.
In addition, however, Torino’s Italian law claim advanced two further arguments which have never been considered previously by the English courts.
The first of these new arguments was that Brexit had rendered 1992 ISDA jurisdiction clauses non-exclusive, on the basis that the English courts only had exclusive jurisdiction as against “Contracting States” (defined under s.1(3) Civil Jurisdiction and Judgments Act 1982), which did not include Italy after Brexit. Specifically, Torino argued that Britain had left the EU and removed the Brussels and Lugano Conventions from the definition of “Contracting States”, which mean the only Convention left within that definition was the 2005 Hague Choice of Court Convention, which did not apply to the dispute. As such, Italy was not a “Contracting State” and, as against its courts, the 1992 ISDA jurisdiction agreement was non-exclusive.
Torino’s second argument was that matters relating to public finance constituted ‘non-disposable rights’, which under Italian law could not be subject to a choice of jurisdiction under the 1995 Italian Private International Law Act.
Butcher J found that neither argument raised a triable issue. As regards the first argument, he found that Torino’s construction of the term “Contracting States” in the 1992 ISDA was inconsistent with the wording of the Master Agreement, the history of s.1(3) of the 1982 Act and the general understanding of its effect in previous cases. Torino had, at the time of contracting, agreed to exclusive jurisdiction as between the English and Italian courts, and there was nothing unjust and unexpected in it being held to that bargain.
As regards non-disposable rights, the judge held that the 1995 Italian Private International Law Act was of no application as it was a mandatory rule of Italian law which did not affect the material validity of an English-law governed jurisdiction clause. Furthermore, even if the 1995 Act did apply, it was clear that derivative contracts were not non-disposable rights under the 1995 Act, and could validly be the subject of English law jurisdiction clauses.
Butcher J therefore granted declarations confirming the scope and effect of the 1992 ISDA jurisdiction clause governing the swaps and holding that the Italian Proceedings had been brought in breach of the clause.
Andrew Lodder and Matthew Hoyle acted for Dexia, instructed by Bonelli Erede Pappalardo LLP
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