This case is yet another ruling of English courts on competing clauses, and reaffirms the importance of the jurisdiction choices made through standard documentation in financial and derivatives documentation.

In October 2008, Trattamento Rifiuti Metropoliani SpA (“TRM”), an Italian company specialised in waste treatment, entered into a financing agreement with a syndicate of banks led by BNP Paribas SA (“BNPP”) in order to design, build and operate a facility in Turin to convert waste into energy.

In March 2010, in accordance with the financing agreement, TRM and BNPP entered into an interest rate hedging transaction governed by a 1992 edition of the ISDA master agreement which was expressly governed by English law and provided that “in the case of conflict between the provisions of this Agreement and the [financing agreement]… the provision of the [financing agreement]… shall prevail”.

Later that month, the parties agreed an interest rate swap under the master agreement.

In September 2016 BNPP commenced proceedings against TRM in the English Commercial Court. BNPP sought various declarations in relation to TRM’s obligations under the interest rate swap conducted under the ISDA master agreement.

In April 2017 TRM commenced proceedings against BNPP in Italy in respect of whether the hedging strategy had been properly implemented.


The High Court began its analysis of jurisdiction by referring to Article 25(1) of the recast EU Regulation 1215/2012, (the “EU Recast Regulation”) which regulates jurisdiction and the recognition and enforcement of judgments in civil and commercial matters between EU member states.

The Recast Brussels Regulation provides that, if parties have agreed that the court of an EU member state have jurisdiction to settle any disputes that arise, that court has jurisdiction to do so, irrespective of where the parties are domiciled.

TRM unsuccessfully argued that the English court had no jurisdiction to hear the claim because:

  • there was no serious issue to be tried because there was no dispute regarding the ISDA master agreement.

On this point, the High Court disagreed: while there was no dispute over the validity of the ISDA master agreement, there was a dispute as to the rights that BNPP had under the interest rate swap conducted under the agreement;

  • the ISDA master agreement provided that in cases of conflict, the financing agreement would prevail.

However, the High Court significantly held that there was no such conflict, as the parties had different relationships, and the financing agreement and the ISDA master agreement governed different legal relationships. Therefore, the respective jurisdiction clause in each of the agreements was concerned with separate matters.

Applying a broad construction of the contracts (as per Sebastian Holdings Inc v Deutsche Bank ([2011] 1 Lloyd’s Rep 106)), the court found that the jurisdiction clauses could fit together and thus there was no basis for rewriting the contracts;

  • the factual context surrounding the agreements should be considered in interpreting the jurisdiction clauses and the context supported TRM’s position;

On this point, the High Court disagreed again. The factual context did not support TRM’s position, in the sense that the use of ISDA documentation – an industry standard – was the most important point of factual context; as such, it indicated the parties’ interests in achieving consistency and certainty in this area of financial transacting.

The conclusion was that, where parties use industry standard documentation, they are even less likely to intend that provisions therein may have different meanings depending on the context.


TRM appealed the High Court’s decision on the basis that:

  • the judge had failed to construe, correctly or at all, the financing agreement jurisdiction clause;
  • the judge had not correctly conducted the analysis required by Article 25 of the Recast EU Regulation;
  • the judge had been wrong to find that the conflicts provision in the ISDA master agreement had not been engaged;

On this three points, the Court of Appeal found that the High Court’s interpretation of the jurisdiction clauses had been correct; where a court is “faced with multiple jurisdiction clauses, it must construe them all and do so in a careful and commercially-minded way”, as was confirmed in the recent Court of Appeal decision in Deutsche Bank AG v Savona ([2018] EWCA Civ 1740).

In TRM’s case, the Court of Appeal reaffirmed that the clauses concerned different matters: the ISDA master agreement jurisdiction clause was to govern any disputes relating to the interest rate swap conducted under the master agreement (although connected to the financing agreement), while the financing agreement jurisdiction clause was to govern disputes relating to the financing agreement.

As a consequence:

  • the parties had two distinct legal relationships in relation to one another: a general borrower/lender relationship as set out in the financing agreement, and the specific swap relationship set out in the relevant transaction documents. This was so even though, as TRM had argued, it was clear on the face of the documents that the swap had been entered into “in connection with” the financing agreement, and that the parties’ “respective rights under this [Swap] Agreement are subject to the terms and conditions of” the financing agreement and its Italian jurisdiction clause; and
  • the two jurisdiction clauses should be understood as being complementary rather than competing.

Therefore, the conflicts provision in the ISDA master agreement was not engaged; therefore, disputes concerning the swap fell exclusively within the jurisdiction clause of the ISDA master agreement;

  • the judge had been wrong to find that, with one exception, all of the declarations had sought either to derive directly from the contractually agreed language of the interest rate swap, in particular the ISDA master agreement, or were consequent on those declarations.

This last point was dismissed on the grounds that all of the declarations sought, with only minor amendments, were governed by the ISDA master agreement (and therefore, the English jurisdiction clause) because the declarations were related to the interest rate swap rather than the underlying relationship governed by the financing agreement.

The Court of Appeal’s decision therefore reinforces the High Court’s findings. It is simplest – and often safest – to ensure a consistent choice of (law and) jurisdiction across transaction documents, in order to minimise the opportunity for expensive and time-consuming jurisdiction challenges or – even worse – parallel proceedings. Where there are good commercial reasons for subjecting different parts of a transaction to differing (governing law and) jurisdiction provisions, parties and their advisers would be well-served by thinking carefully through the implications before committing to that course.


Jurisdiction clauses provide parties with certainty as to where their disputes will be resolved; and the fact that the parties have elected to use industry standard documentation is an indicator that they are even less likely to intend that provisions in that documentation may have different meanings depending on the context.

Additionally, before it can be said that jurisdiction clauses conflict, the courts must be satisfied that a dispute cannot be said to be more clearly governed by a jurisdiction clause in one agreement rather than a conflicting jurisdiction clause in another.

For more information, and any guidance or advice on drafting your financial and commercial contracts, Cleveland & Co External in-house counselTM, your specialist outsourced legal team, are here to help.