Cinnamon European Structured Credit Master Fund v Banco Commercial Portugues SA

This is an application by the defendant, Banco Comercial Portugues SA (“BCP”), under CPR 11 and/or the court’s inherent jurisdiction (although I do not see that recourse to any inherent jurisdiction adds anything) to stay a part of these proceedings on the ground that the court has no jurisdiction to try the claim or should not exercise such jurisdiction as it has. As originally formulated, the application was for the whole of the action to be stayed. On 25 November 2009 - just over a week before the hearing in front of me - BCP indicated that it was abandoning its application so far as it related to what was described in argument as “the Vendor Claim”, being one of the two principal heads under which the claimant, Cinnamon European Structured Credit Master Fund (“Cinnamon”), has brought its claims. The other main head of claim is what was described in argument as “the Servicer Claim”. BCP’s application has proceeded in relation to that head of claim.

Mr Paul Lowenstein QC and Mr David Mumford have represented BCP instructed by Baker & McKenzie LLP. Mr Jonathan Crow QC and Mr Richard Hill have represented Cinnamon instructed by Mayer Brown International LLP.

BCP is a substantial bank incorporated under the laws of and registered in Portugal. It is accepted by Cinnamon, certainly for the purposes of this application, that BCP is also domiciled in Portugal. Cinnamon is a Cayman-registered fund.

Cinnamon’s claims in these proceedings arise out of the securitisation of a portfolio of Portuguese residential mortgages which had been granted to BCP (as so-called “Originator”). What happened was that BCP sold the portfolio to a unitised fund called Fundo Magellan Tres (“the Fund”) pursuant to a Mortgage Sale Agreement dated 30 June 2005. At the time of sale the principal outstanding under the loan was said to amount to slightly in excess of €1,500 million. At the same time BCP (as both Servicer and Collection Account Bank and also as Originator) entered into a Mortgage Servicing Agreement (“the Servicing Agreement”) with the Fund pursuant to which BCP, as Servicer, agreed to administer and service the mortgage portfolio on behalf of the Fund and, as Collection Account Bank, agreed to operate a collection account into which receivables from the mortgage portfolio were to be paid. Also at the same time, the Fund entered into a Unit Subscription Form with Magellan Mortgages № 3 plc (a company incorporated in Ireland) (“Magellan 3”) pursuant to which Magellan 3 subscribed for all of the units in the Fund. It did so for €1,504,433,910, the price at which the portfolio was being sold.

In turn Magellan 3 funded its subscription by the issue of a quantity of loan notes denominated in six classes constituted by an English law trust deed of the same date (30 June 2005) entered into between Magellan 3 and Citicorp Trustee Company Ltd as trustee. The classes in question were Classes A to E - each for a different overall amount - of Floating Rate Notes due 2058. (The Class E Notes were, I was told, amortised early in the transaction.) The remaining class, the €250,000 Class F Notes due 2058 did not, unlike the other classes, carry an interest coupon. Instead the Class F Notes conferred in effect a right of participation in the residual profit in the mortgage portfolio, ie the remaining profit available from the portfolio after payment of the obligations due under the Notes comprising the other classes (and certain other costs and expenses arising from the securitisation). Another document was also entered into, a so-called Transaction Management Agreement, between the trustee, BCP and Magellan 3 pursuant to which BCP agreed to act as transaction manager for Magellan 3 and the trustee in relation to the assets and obligations of Magellan 3 in accordance with the terms of that agreement. It set out the priorities as between the six classes of Notes. I do not think I need to go further into that document.

The issue of the Notes was the subject of an Offering Circular dated 24 June 2005. It contained various “responsibility statements” among which were that the Circular contained all information which was material in the context of the issue of the Notes, that such information as was contained in the Circular was true and accurate in all material respects and not misleading, and that there were no other facts the omission of which made the Circular as a whole or any of such information misleading in any material respect.

The Class F Notes were acquired by BCP pursuant to a Note Purchase Agreement which it had entered into with Magellan 3. Some months later, in March 2006, BCP chose - unusually, Cinnamon maintains, in the case of European residential mortgage securitisation - to sell its residual profit in the portfolio represented by its holding of Class F Notes. It did so to Goldman Sachs for €51,832,767. The contractual arrangements for that transaction were entered into on 29 March 2006 and were contained in two documents, a so-called Securities Purchase Agreement (“the GS Purchase Agreement”) and a letter, executed and delivered as a deed, addressed by BCP to Goldman Sachs. The document was referred to in the GS Purchase Agreement (and before me) as “the Representation Letter”.

The GS Purchase Agreement provided for the sale of the Class F Notes to Goldman Sachs and contained various representations and warranties among which, at clause 4.7, was a representation and warranty that “…no circumstances exists, which might reasonably be expected at any time hereafter to render any of the warranties and representations contained in this Agreement, no longer true or accurate.” At clause 4.20 was a representation and warranty that “all written information provided to the Purchaser (including, for the avoidance of doubt, the information summarised as Schedule 1 to the Representation Letter) is true and accurate in all material respects.” The GS Purchase Agreement also contained a choice of law and jurisdiction clause in the following terms:

“This Agreement is governed by, and shall be construed in accordance with, English law. The Purchaser and the Vendor hereby agree that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with this Agreement and that accordingly any suit, action or proceedings (together referred to as “Proceedings”) arising out of or in connection with this Agreement may be brought in such courts. Nothing contained in this Clause shall limit any right of the Purchaser or the Vendor to take Proceedings against the other party in any other court of competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction, whether concurrently or not.”

The Representation Letter referred to the GS Purchase Agreement and the Servicing Agreement and stated that, unless otherwise defined, the definitions and rules of interpretation contained in the Representation Letter were as set out in the GS Purchase Agreement. Clause 2.2 of the Representation Letter contained an undertaking to Goldman Sachs by BCP as Servicer:

“…to continue to perform its obligations under the Mortgage Servicing Agreement in accordance with its terms and as if the Servicer was the owner of the economic interests in the Class F Notes but the Servicer shall not be required to do anything which it is prevented from doing by any Portuguese law or any applicable law”

Clause 5 provided that, without prejudice to clause 4.20 of the Securities Purchase Agreement, “BCP has delivered or made available to Goldman Sachs the documents listed in Schedule 1 to this letter…”. The schedule duly set out a number of documents including, in particular, the Offering Circular. Clause 9.1 of the Representation Letter stated that it was “governed by and construed in accordance with English law” and clause 10, headed “Agent for Services of Process” stated that:

“BCP irrevocably appoints its Representative Office in London [address set out] to accept service of any process on its behalf and further undertakes that it will at all times during the continuance of this Agreement maintain the appointment of some person in England as its agent for the service of process and irrevocably agrees that service of any writ, notice or other document for the purpose of any suit, action or proceeding in the courts of England shall be duly served upon it if delivered or sent by registered post to the address of such appointee (or to such other address in England as that party may notify to the other parties hereto).”

Later in 2006 Goldman Sachs sold on the Class F Notes to Cinnamon. This occurred in two tranches. The first was on 11 May 2006. The second was on 13 October 2006. The overall consideration was €56,478,602. By means of various bipartite and tripartite arrangements Cinnamon took the benefit of all rights under the Representation Letter and the GS Purchase Agreement.

Mr Lowenstein had a point concerning the assignment to Cinnamon by Goldman Sachs of the latter’s rights under the GS Purchase Agreement in that, by a deed dated 8 June 2009 (a mere three days before the claim form in these proceedings was issued), Goldman Sachs assigned to Cinnamon its rights under that Agreement in respect of the Class F Notes with effect from the date of the respective sale agreements between Goldman Sachs and Cinnamon. Mr Lowenstein’s contention was that until 8 June 2009, and contrary to an averment in the Particulars of Claim, Cinnamon had no basis for any entitlement to rely, and in purchasing the Class F Notes did not in fact rely, on the provisions of the GS Purchase Agreement. This contention is denied by Cinnamon. It is not a matter that I can determine on this application but, in any event and as will appear, it is not something which at the end of the day is of importance to the issues which I have to determine.

By these proceedings Cinnamon complains that BCP has performed its functions as Servicer (under the Servicing Agreement) to the detriment of the interests of the Class F Noteholders (ie of Cinnamon), in particular by modifying the terms of the loans in the underlying mortgage portfolio without reference, and contrary, to the interests of the Class F Noteholders. The essence of the complaint is that, by agreeing reductions in the interest rates payable under the mortgage loans in order (as Cinnamon maintains) to retain the customer (the borrowing mortgagor) as a banking customer, reward him for taking out, or for already having taken out, other products with BCP, or otherwise incentivise the customer, the result has been that, save in certain limited cases, the return that has been and will be received under the Class F Notes has been significantly reduced in value.

As I have mentioned, Cinnamon’s complaints are brought under two main heads. The first, the so-called Servicer Claim, is for breach of clause 2.2 of the Representation Letter whereby BCP undertook to perform its obligations under the Servicing Agreement in accordance with its terms and as if BCP, as Servicer, were the owner of the economic interests in the Class F Notes. It pleads that if it had been complying with that obligation BCP would not have agreed to any of the reductions in the underlying interest rates. The second, the so-called Vendor Claim, is for breach of clauses 4.7 and 4.20 of the GS Purchase Agreement. The complaint under clause 4.20 alleges that, in breach of the warranty contained in that provision, the information summarised as Schedule 1 to the Representation Letter was not true and accurate in all respects in that the Offering Circular (as one of the documents so scheduled) did not contain all of the information which was material in the context of the issue of the Notes and that facts were omitted which made the Offering Circular as a whole, or part of it, materially misleading. Particulars are set out concerned with BCP’s actions in agreeing the reduction in the interest rates under the underlying mortgage loans (and also in connection with related matters). The complaint under clause 4.7 is that, by reason of the same matters that form the complaint under clause 4.20 and in breach of the warranty contained in clause 4.7, circumstances did exist which might reasonably be expected at any time thereafter to render any of the warranties and representations no longer true and accurate. Cinnamon pleads that if it had been known the true position it would not have purchased the Class F Notes at all. It estimates its loss and damage under either main head of complaint to be at least €17,801,051.

Since BCP makes its application under CPR 11 it has not served a defence so that its answer to the merits of Cinnamon’s complaints is unknown. I certainly do not assume that there is no defence to them; I proceed instead on the basis that Cinnamon brings genuine claims and that BCP may or may not have genuine defences to them.

This application is concerned with whether this court has jurisdiction, and if it has it whether it should exercise it, to hear Cinnamon’s Servicer Claim. As I have mentioned, the application, so far as it originally maintained that this court had no jurisdiction to try Cinnamon’s Vendor Claim is no longer pursued. On the face of it, therefore, the Vendor Claim will proceed in this jurisdiction in any event.

It is common ground that the issues arising on this application are governed by Council Regulation (EC) № 44/2001 of 22 December 2000 (on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) (“the Regulation”) and, in particular, on the applicability of article 23. The matters material to that are (1) that BCP is domiciled in Portugal, a relevant Member State; and (2) that, accordingly, article 2(1) requires that BCP must be sued in the courts of Portugal unless, by article 3(1), BCP may be sued in the courts of another Member State by virtue of the rules set out in articles 5 to 24. Of those articles Cinnamon only relies on article 23. The material part of that article is to be found in article 23(1) which provides as follows:

“1.

If the parties, or one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either:

(a)

in writing or evidenced in writing; or

(b)

in a form which accords with practices which the parties have established between themselves; or

(c)

in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.”

The question raised by article 23 thus comes down to this: can Cinnamon, on whom the burden lies to demonstrate that it comes within that exception to the general rule, enshrined in article 2, that a person domiciled in Portugal may only be sued within the courts of Portugal, show that the Servicer Claim is subject to an agreement conferring jurisdiction on the English court?

It is accepted by Cinnamon that the fact that its Vendor Claim is subject to such an agreement (namely the non-exclusive jurisdiction provision contained in clause 14 of the GS Purchase Agreement) does not in any way determine the jurisdiction issue - arising under article 23 - in relation to the Servicer Claim. Under the Regulation the court is required to consider its jurisdiction separately in respect of each claim. The Regulation thus contemplates what has been described in this field as “fragmentation”, that is that one claim by a claimant may be subject to the jurisdiction of the courts in Member State A while another of the claims in the same overall dispute may fall within the jurisdiction of Member State B. Fragmentation is scarcely desirable. A solution, where the circumstances justify it, may lie in article 28 concerned with “related actions”. Another is mentioned in Leathertex Divisione Sintetici SpA v Bodetex BVBA (Case C-420/97) [1999] 2AER (Comm) 769 at [41] where the ECJ stated:

“41.

It should be remembered that, while there are disadvantages in having different courts ruling on different aspects of the same dispute, the plaintiff always has the option, under art 2 of the Brussels Convention, of bringing his entire claim before the courts for the place where the defendant is domiciled.”

What then must Cinnamon show if it is to make good its contention that article 23 applies as much to the Servicer Claim as it does (as BCP now accepts) to the Vendor Claim?

Mr Crow accepts that, although the test on an interim application is one of good arguable case, it is necessary to take account of the fact the ECJ has determined that the formal requirements of article 23 should be interpreted strictly. This is that because the purpose of the formal requirements of article 23 is to ensure that the parties have indeed consented to a jurisdiction agreement derogating from the ordinary jurisdictional rule founded on domicile. It is therefore necessary that this consent should be clearly and precisely demonstrated: see Dicey, Morris and Collinson The Conflict of Laws, 14^th Edition, at paragraph 12-100. In practice, submitted Mr Crow, this means that a claimant relying on article 23 as conferring jurisdiction on the court where its claim has been brought must show that it has “a much better argument than the defendants that, on the material available…the requirements of form in article 23(1) are met and that it can be established, clearly and precisely, that the clause conferring jurisdiction on the court was the subject of consensus between the parties.” See Bols Distilleries BV v Superior Yacht Services Ltd [2006] UKPC 45; [2007] 1WLR 12 at [28]. He submits that Cinnamon surmounts this hurdle.

Mr Lowenstein did not dissent from any of this. The only wrinkle was with regard to the range of matters in respect of which the claimant must establish that it has a much better argument than the defendant. Is it in respect of all matters including, for example, the scope of any jurisdiction agreement (for example, whether as a matter of construction a particular dispute is covered by the agreement) or is it merely in respect of the requirements of the article? The answer, although it probably makes no practical difference in this case, is the latter. This was the conclusion reached by Lewison J in Knorr-Bremse Systems for Commercial Vehicles Ltd v Haldex Brake Pollocks GmbH [2008] EWHC 156 (Pat); [2008] (Bus LR Digest D63 at[25]) and I see no reason to disagree. Having thus established that the claimant has a much better argument than the defendant on the requirements of article 23 (namely that there is a jurisdiction agreement and that the agreement satisfies one or other of the formalities set out in article 23) it is then for the national court to construe the agreement to determine whether the particular dispute falls within its scope. When it comes to construing the agreement the test is simply one of good arguable case.

Since Cinnamon relies on clause 10 in the Representation Letter, alternatively clause 14 of the GS Purchase Agreement, as constituting the jurisdiction agreement there can be no question but that both of those provisions, being in writing, complied with the formalities stipulated by article 23. The substantive questions therefore are whether clause 10, properly understood, does constitute an agreement between Cinnamon and BCP that the courts of this country “are to have jurisdiction to settle any disputes which have arisen or which many arise in connection with” their legal relationship arising out of the Representation Letter and, if it does not, whether clause 14 of the GS Purchase Agreement, which is undoubtedly a jurisdiction agreement within the meaning of article 23, is apt to extend to the Servicer Claim.

Mr Lowenstein made the following points about the Representation Letter in general and clause 10 in particular. In contrast to the GS Purchase Agreement the Representation Letter contains no express choice of jurisdiction clause. Clause 10 is no more than a service of process clause - for use in this jurisdiction - which is not the same as a choice of jurisdiction clause. As such, clause 10 does no more than make provision for how English proceedings may be served (namely, at BCP’s Representative Office in London for which purpose a person in England will be appointed as its agent for the service of process) if, but only if, the proceedings are otherwise properly brought in this jurisdiction. Service is distinct from jurisdiction in that the Regulation is deliberately designed, where it applies, to prevent service operating as a foundation for jurisdiction, a point emphasised by article 3(2) which provides in terms that “the rules of national jurisdiction set out in Annex 1 shall not be applicable as against them”, ie as against persons domiciled in a Member State. Annex 1 refers, in the case of the United Kingdom, to “rules which enable jurisdiction to be founded on: (a) the document instituting the proceedings having been served on the defendant during his temporary presence in the United Kingdom”. (The reference to “temporary presence” is, I understand, because the assumption is that the defendant in question is not domiciled in the United Kingdom). It follows therefore thatwhether or not the English court has jurisdiction over proceedings brought against a defendant domiciled in a Member State (such as those by Cinnamon against BCP) depends not upon the efficacy of an agreement as to the means of service upon that defendant but, exclusively, upon the application of the rules set out in the Regulation. In Deutsche Bank AG v Sebastian Holdings Inc [2009] EWHC 2132 (Comm) at [83] the court held that service clauses do not of themselves confer jurisdiction. To hold otherwise in the case of clause 10 would be to revert to a position where jurisdiction in a Regulation case is founded on service and not on domicile or a Regulation derogation. The purpose of a service of process clause, and of clause 10 in particular, is to provide an alternative and more straightforward mechanism for service of English process.

That the intended effect of clause 10 cannot have been to found substantive jurisdiction and thereby deprive BCP of the right which it otherwise has under the Regulation to be sued in the courts of its domicile becomes evident when it is contrasted with clause 14 of the GS Purchase Agreement. The significance of the contrast is that at the very time they were entering into the Representation Letter, BCP and Goldman Sachs were able to agree an explicit regime for jurisdiction in the GS Purchase Agreement. The court therefore has the plainest evidence that it was open to BCP and Goldman Sachs to incorporate such a provision in the simultaneous Representation Letter and that they turned their minds to the question of a jurisdiction agreement when they entered into the GS Purchase Agreement. Yet, in agreeing the terms of the Representation Letter, they chose not to agree to include such a provision. Accordingly, as a matter of construction in the light of the inclusion of just such a clause in the GS Purchase Agreement, the omission of any jurisdiction agreement in the Representation Letter should be taken to have been intentional. In such circumstances Cinnamon should not be allowed to elevate a service of process clause into a choice of jurisdiction clause.

It would not be correct to read the GS Purchase Agreement and the Representation Letter together so that clause 14 of the GS Purchase Agreement may be read as applying to disputes arising under the Representation Letter. It is impermissible to do so because, although entered into on the same day and although each refers to the other, the two are nevertheless separate instruments involving separate agreements, in one of which, the GS Purchase Agreement, the parties chose, presumably intentionally, to insert and English choice of law an English choice of jurisdiction clause and in the other, the Representation Letter, the parties chose, presumably intentionally, not to do so. Moreover, the Representation Letter was executed and delivered as a deed. This was presumably to ensure that it would be enforceable. If the parties had considered that the obligations contained in the Representation Letter were but a part of the wider transaction which incorporated the GS Purchase Agreement, this would not have been necessary.

It is not at all surprising that there are two separate documents since each serves a different purpose: the GS Purchase Agreement governs the sale of the Class F Notes and gives rise to obligations (including warranties as to accuracy of information contained in the Offering Circular and the like) on BCP as vendor of the Notes whereas the Representation Letter is directed to the continuing administration of the underlying mortgage portfolio by BCP in its role as Servicer. Its effect is to make breaches by BCP of its obligations as Servicer under the Servicing Agreement actionable by the purchaser of the Class F Notes. It is to be noted, in this regard, that the obligations in the Servicing Agreement are to be performed in Portugal and are governed by Portuguese law and subject to a Portuguese choice of jurisdiction for the determination of the disputes. There is good reason therefore why the Representation Letter is distinct from the GS Purchase Agreement.

It is also to be noted that in its particulars of claim Cinnamon pleads the GS Purchase Agreement and the Representation Letter as separate instruments. What is more, Cinnamon appears to have treated the Representation Letter as quite separate in that, although when it purchased the Class F Notes it took an assignment of Goldman Sachs’ rights against BCP under the Representation Letter, it failed to take any assignment of Goldman Sachs’ rights against BCP under the GS Purchase Agreement until very shortly before launching these proceedings.

As to the scope of clause 14 and whether it can properly be construed as extending to Cinnamon’s Servicer Claim, although jurisdiction clauses ought ordinarily to be given a wide and generous interpretation (see UBS AG v HSH Nordbank AG [2009] EWCA Civ 585 at [82] per Lord Collins of Mapesbury) the court’s task at the end of the day is to construe clause 14 in the light of the transaction as a whole (see the UBS case at [83]). In this connection, it is to be noted that unlike many jurisdiction agreements clause 14 is not an exclusive submission to the jurisdiction of the English court. It cannot be said that commercial persons such as Goldman Sachs and BCP would not have contemplated different jurisdictions for the resolution of disputes under the Representation Letter and under the GS Purchase Agreement. The fact is that the third sentence of clause 14 itself contemplates “other jurisdiction acceptances” and, moreover, contemplates more than one set of proceedings in more than one jurisdiction at the same time.

Nor is it correct to construe the expression “any dispute which may arise…in connection with the Agreement” appearing in the second sentence of clause 14 as extending to a dispute under the Representation Letter. A dispute “in connection with” the GS Purchase Agreement, properly understood, refers to a pre-agreement matter such as misrepresentation. See, in this connection, the UBS case at [82]. The Servicer Claim under the Representation Letter is not of that kind.

Mr Crow began his submissions on the substantive questions by summarising the commercial and factual context at the time the GS Purchase Agreement and Representation Letter were entered into. These were (1) that both the GS Purchase Agreement and the Representation Letter were made on the same day, (2) that the two documents were entered into between the same two parties (Goldman Sachs and BCP), (3) that the two are concerned with the same subject matter, namely the sale of the Class F Notes, (4) that each document refers to the other in that (a) as a matter of interpretation the Representation Letter cannot be understood without reference to the GS Purchase Agreement (as shown by the fact that, by clause 1, “the definitions and rules of interpretation” contained in the Letter are as set out in the GS Purchase agreement) and (b) as a matter of substance the GS Purchase Agreement cannot be given effect without reference to the Representation Letter because clause 4.20 of the Purchase Agreement warrants the truth and accuracy of the documents scheduled to the Representation Letter, (5) that as a matter of commercial reality the GS Purchase Agreement and the Representation Letter are inextricably linked in that the whole purpose of the Letter is to protect Goldman Sachs’ investment in the Class F Notes which are being acquired under the Purchase Agreement, a matter emphasised by clause 7.1 of the Letter which provides that the Representation Letter “may be disclosed and relied on by a party to whom Goldman Sachs assigns, transfers or novates its interests in the Class F Notes…as if this letter had been addressed to them”, (6) that both contain English choice of law clauses and (7) that the GS Purchase Agreement contains an express and unequivocal choice of English jurisdiction clause. Just as the GS Purchase Agreement and the Representation Letter are closely linked so also are the Vendor Claim and the Servicer Claim which Cinnamon advances. They both rely on the same factual basis as summarised at paragraph 12 above.

Against that background Mr Crow submitted that, truly understood, clause 10 of the Representation Letter is in reality a choice of jurisdiction agreement. The clause expressly contemplates and recognises that there will be proceedings in England to resolve disputes in connection with the Letter. It not only contains a promise to appoint and maintain an agent in England for the service of process generally but it also provides expressly for an irrevocable agreement that “…service of any writ, notice or other document for the purpose of any suit, action of proceeding in the courts of England shall be duly served upon it if delivered or sent by registered post to the address of such appointee…”. Accordingly, the fact that there may be proceedings in the courts of England to resolve disputes in connection with the Representation Letter is expressly recognised and provided for. It envisages that BCP will have been “duly” served, ie properly and regularly served, with such proceedings when they are delivered or sent to the address of the appointee. Although it might have been possible for the parties to have added further express words to the effect that such proceedings may be brought in the courts of England, that wording would have been otiose: the existing wording already makes clear both that such proceedings may be so brought and that they will be duly served if served in the manner specified.

It is not suggested that the English court has jurisdiction merely because BCP has been served here: it is acknowledged that the Regulation does not permit that. The English court has jurisdiction because clause 10 is an agreement by BCP that it may be served here.

It is a mischaracterisation of the Servicer Claim to suggest that it is concerned with breaches of the Servicing Agreement between BCP and the Fund and to suggest that the Representation Letter is in substance linked to or adjectival to that agreement rather than to the GS Purchase Agreement. The Servicer Claim does not depend upon establishing any breach of the Servicing Agreement. The contention rather is that BCP has conducted its functions as mortgagee in a way that it would not have done if it had carried out its undertaking in clause 2.2 of the Representation Letter to act as if it were the owner of the economic interests in the Class F Notes. Whether or not BCP has acted in breach of the Servicing Agreement is immaterial. It is immaterial therefore that the Servicing Agreement contains a Portuguese choice of law and a Portuguese exclusive jurisdiction clause for the resolution of disputes. The contention also ignores the fact that the Representation Letter is governed by English law and contemplates proceedings taking place in this jurisdiction.

Further and in any event, the dispute that is the subject of the Servicer Claim falls within the scope of clause 14 of the GS Purchase Agreement. By that clause the parties agreed that the courts of England were to have “jurisdiction to settle any disputes which may arise out of or in connection with this Agreement…”. Given the commercial and factual context of the GS Purchase Agreement and Representation Letter, either the undertaking at clause 2.2 of the Representation Letter forms part of the “Agreement” for the purposes of clause 14, or at the very least any dispute in relation to clause 2.2 of the Representation Letter is, on the proper construction of clause 14, a dispute arising “in connection with” that Agreement. In that context all the terms of the Representation Letter are connected with the GS Purchase Agreement because the two documents cross refer to each other and were part of a single sale transaction. Clause 2.2 of the Representation Letter contains the undertaking extracted from BCP as to its future conduct so as to preserve the value of the Class F Notes under the GS Purchase agreement. The reference in clause 14 to disputes which may arise “in connection with” the Agreement is additional to the reference to disputes arising “out of” the agreement and is clearly intended to embrace a wider category of dispute. It is well established that this is a wide form of wording and that clauses of this kind and with this type of wording are to be construed widely: see, for example, the UBS case [2009] EWCA Civ 585 at [82]. The wide wording of clause 14 therefore comfortably covers a dispute arising out of BCP’s performance of its undertaking at clause 2.2 of the Representation Letter.

Finally, it is to be presumed that these commercial parties would have wanted all their disputes regarding their legal relationship arising from the sale of the Class F Notes to have been capable of being resolved in one forum. Over and above the fact that both documents provide for English law, both clause 14 of the GS Purchase Agreement and clause 10 of the Representation Letter expressly recognise that there will be proceedings in England. It must have been contemplated by the parties that it would be likely that disputes under the two documents would have overlapping issues. That is the case with the Vendor and Servicer Claims. The parties must be taken to have had this likelihood in mind when the two agreements were made.

It is irrelevant that there was no formal assignment to Cinnamon of the benefit of Goldman Sachs’ rights against BCP under the GS Purchase Agreement until many months after the purchase of the Class F Notes by Cinnamon. The questions which arise for decision on this application turn on the proper interpretation of the GS Purchase Agreement and the Representation Letter when set against the legal and factual context at the time they were entered into. They do not to any extent turn on the circumstances in which rights arising under those agreements were assigned to others.

It is plain that for the reasons submitted by Mr Crow (and summarised at paragraph 30 above) the Representation Letter and the GS Purchase Agreement are inextricably linked. They set out the contractual arrangements which govern the terms on which Goldman Sachs purchased the Class F Notes on 29 March 2006. It is artificial to regard them as wholly free-standing documents, operating independently of one another, and to approach the construction of the one as if the other did not exist except only to the extent that it is referred to or incorporated into the former.

That being so, I am of the view that any dispute arising out of the Representation Letter is properly to be regarded as within the scope of clause 14 of the GS Purchase Agreement. That clause is a choice of jurisdiction clause not just for any dispute arising out of that agreement but also for any which arises “in connection with this agreement…” In Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40; [2007] 4 All ER 951 at [13] Lord Hoffmann pointed out that the construction question in issue there (it concerned a choice of law, jurisdiction and arbitration clause) “should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal”. He then added: “The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator’s jurisdiction”. Lord Hope (at [25] and [26]) stated that the clause fell into that category of terms where, if its purpose is clear, the parties are unlikely to linger over the words which are used to express it”. He later added:

“The proposition that any jurisdiction or arbitration clause in an international commercial contract should be liberally construed promotes legal certainty. It serves to underline the golden rule that if the parties wish to have issues as to the validity of their contract decided by one tribunal and issues as to its meaning decided by another, they must say so expressly. Otherwise they will be taken to have agreed on a single tribunal for the resolution of all such disputes.”

With those observations in mind I see every reason to construe clause 14 liberally so that the reference to disputes arising “in connection with this agreement” is well capable of extending to any dispute (such as the Servicer Claim) arising under the very closely related Representation Letter and no good reason for confining it to “pre-agreement” matters (such as a misrepresentation which is alleged to have induced the agreement in question) as Mr Lowenstein submitted. It is not a proper reading of Lord Collins' comments in the UBS case (at [82]) to suppose that he was intending thereby so to confine the meaning of such words.

The fact that clause 14 does not exclude the right of either party to take proceedings against the other in any other court of competent jurisdiction (other, that is, than the courts of England) and makes clear that the taking of proceedings in one or more jurisdictions is not to preclude the taking of proceedings in any other jurisdiction, whether concurrently or not, does not persuade me that I should adopt a narrower construction of the scope of the clause or reject the presumption to which Lords Hoffmann and Hope referred in the passages from Fiona Trust set out above.

If I am wrong about the wide scope of clause 14 and it is necessary to treat it as inapplicable to disputes under the Representation Letter and focus instead on the true meaning of clause 10, it is clear that the clause contemplates that there will be proceedings in England for the resolution of disputes arising out of the Letter. I do not think that the clause is no more than an arrangement for service in this country if there should happen to be proceedings arising out of the Representation Letter which, under the terms of the Regulation (other than article 23), are properly to be brought in this jurisdiction. Mr Lowenstein had difficulty in suggesting any examples of how this might arise. He gave as a possibility a dispute arising out of the operations of the London Office of BCP, which would give jurisdiction to the courts of this country under article 5(5). I regard this as altogether far-fetched when, so far as I can see, there is not the slightest reason to think that the London Office has any role to play, other than under clause 10, in any matter to which the Representation Letter relates. Another no less farfetched possibility suggested by Mr Lowenstein was that BCP might be implicated in some tortious activity connected with the duties arising under the Representation Letter and this country is the place where the harmful event occurs (see article 5(3)).

In my view clause 10 is a recognition that any proceedings arising out of the Representation Letter may properly be brought in this jurisdiction. As such the clause amounts to a non-exclusive choice of jurisdiction agreement within the scope of article 23. Correctly understood, the decision in Deutsche Bank is not authority for the broad proposition advanced by Mr Lowenstein that service of process clauses cannot be construed as an agreement to have any disputes that may arise resolved by the courts of the place to which the clause relates.

In the result, although there are arguments to the contrary, as Mr Lowenstein's submissions ably demonstrated, I am of the view that Cinnamon has much better arguments than BCP that the requirements of article 23 are met. I shall therefore dismiss the application. This means that both the Servicer Claim and the Vendor Claim will continue to trial in this jurisdiction.