Barclays Bank Plc v Ente Nazionale Di Previdenza Ed Assistenza Dei Medici E Degli Odontoiatri

The claimant, Barclays Bank PLC, is an English bank. The defendant, Ente Nazionale di Previdenza ed Assistenza dei Medici e Degli Odontoiatri (“ENPAM”) is an Italian pension fund. A dispute has arisen between them as to a transaction entered into by way of a Conditional Asset Exchange Letter from ENPAM to Barclays dated 21 September 2007 by which ENPAM exchanged fund assets for securities which were in the form of credit-linked notes called the “Ferras CDO securities”. ENPAM’s claim is that it incurred a major loss in the transaction, and that it is entitled in law to look to Barclays to make that loss good.

ENPAM began proceedings against Barclays and others in the Civil Court of Milan on 23 June 2014 (the Milan proceedings). Barclays says that this was in breach of provisions in the contractual documentation giving exclusive jurisdiction to the English courts. It issued these proceedings seeking a declaration to that effect and other relief on 15 September 2014. I am told that the proceedings were not served for some time. On 20 April 2015, ENPAM applied pursuant to Article 27 or Article 28 of Council Regulation (EC) No. 44/2001 (the “Judgments Regulation”) for an order that the English court should not exercise its jurisdiction in these proceedings on the basis that Milan court was first seised.

On 18 May 2015, Barclays issued a summary judgment application in these proceedings on the basis that there is no defence to its claim that the Milan proceedings fall within contractual provisions giving exclusive jurisdiction to the English courts.

Following an exchange of correspondence between the parties, on 31 July 2015 Mr Justice Flaux, the judge in charge of the Commercial Court, acceded to Barclays’ application that the summary judgment application be heard at the same hearing as ENPAM’s jurisdiction application, subject always to the directions of the judge hearing the applications.

Seven witness statements were placed before the court explaining the factual background. The hearing took place on 14 and 15 September 2015.

There are three matters for decision:

JURISDICTION

Without accepting any contentious assertions contained in it, and for the purposes of this hearing only, Barclays has agreed the following summary of the Milan proceedings in ENPAM’s skeleton argument.

By a Writ of Summons and Statement of Claim dated 12 June 2014 (the Italian Statement of Claim), ENPAM commenced the Milan proceedings against Barclays and five other defendants alleging as follows.

ENPAM is an Italian non-profit foundation with legal personality governed by private law. It manages a fund for the benefit and welfare of its members, namely, surgeons and orthodontists. Pursuant to Italian statutory provisions by which ENPAM became a private law foundation, ENPAM’s investments were required to carry low risk, guarantee full repayment of capital, and allow immediate recoupment of the investment at any time.

Prior to 2007, ENPAM held various assets as part of an investment portfolio. During 2007, after detailed discussions with Barclays, including visits by two of Barclays’ employees (Giorgio Carone and Guido Contesso, both of Italian nationality but based at Barclays’ offices in London) to ENPAM’s offices in Italy, ENPAM alleges that it was persuaded to enter into an asset exchange transaction with Barclays whereby it exchanged certain securities and cash for €140 million (in notional value) of the Ferras CDO securities, with the transaction being effected pursuant to the terms of a Conditional Asset Exchange Letter dated 21 September 2007 as amended by a Supplement and Second Supplement to the Conditional Asset Exchange Letter dated 1 October 2007 and 11 October 2007 respectively.

ENPAM’s case is that the Ferras CDO securities were a very risky and complex type of credit-linked note which subordinated the repayment of capital and interest to the occurrence of credit events (such as debt restructuring, failure to pay and bankruptcy of the issuing company) concerning a portfolio of underlying financial assets (i.e. the reference entities), and that the characteristics of the Ferras CDO securities were wholly inappropriate for ENPAM’s investment objectives. ENPAM further alleges that following further discussion with Barclays, certain changes and restructurings to the Ferras CDO securities portfolio occurred during the period 2008 to 2010, involving a substantial additional payment by ENPAM to Xelo Plc as issuer of the Ferras CDO securities.

As a result of the interactions between Barclays and ENPAM – as well as between ENPAM and entities known as ECP International S.A. (a Luxembourg company) and E. Capital Partners S.p.A (an Italian company now called Mittel Advisory Debt and Grant S.p.A. which is or was at the time the parent of ECP International), the former having been appointed as “ethical advisor” and/or “ethical reviewer” in relation to the Ferras CDO securities – ENPAM alleges that Barclays and its employees, Messrs Carone and Contesso, as well as ECP International/Mittel, “supplied [ENPAM] with a number of investment and ancillary services”, including the “supply of advice”, and that Barclays was involved in the management of ENPAM’s investment portfolio.

ENPAM contends that, in so acting without the prior execution of a written framework agreement which is preliminary to the actual provision of investment services (including the proposal of financial products by Barclays to ENPAM), Barclays (and the other defendants) acted contrary to Italian law (in particular, Articles 23 and 24 of the Consolidating Finance Act) and breached both the general principle of good faith in negotiations under Article 1337 of the Italian Civil Code (and provisions of the Consolidating Finance Act and Consob Regulation No. 11522 of 1998 particularising the principle of good faith in relation to the conduct of financial intermediaries) and engaged in unlawful conduct contrary to Article 2043 of the Italian Civil Code.

In addition, ENPAM claims that because the Conditional Asset Exchange Letter did not articulate ENPAM’s right of withdrawal in the context of a transaction “proposed and negotiated door to door and remotely by [Barclays]”, the transaction was contrary to Article 30 of the Consolidating Finance Act. Further, because Barclays engaged in “door-to-door selling without engaging financial promoters entered in the Register of Financial Promoters” (neither Giorgio Carone nor Guido Contesso being so registered) ENPAM contends that Barclays also acted in breach of Article 31 of the Consolidating Finance Act.

For these reasons, ENPAM claims against Barclays (and the other defendants), by way of “main claim”, compensation by way of damages in respect of “pre-contractual liability pursuant to [A]rticle 1337 of the Italian Civil Code” and “extra-contractual liability pursuant to [A]rticle 2043 of the Italian Civil Code”. With regard to the quantum of damages claimed, ENPAM alleges that if it had retained the exchanged assets in its portfolio and not invested in the Ferras CDO securities, it would have been approximately €96 million better off and it therefore claims that amount by way of damages.

As “secondary claims”, still by reason of the aforesaid absence of the prior conclusion of a written framework agreement and/or the failure to reserve a right of withdrawal for ENPAM in the contractual documentation, and/or non-registration of Messrs Carone and Contesso as financial promoters, ENPAM claims nullity (alternatively cancellation or termination) of all of the agreements (i.e. the Conditional Asset Exchange Letter and all subsequent agreements between the parties) by which the entire asset exchange transaction was effected, together with consequential restitution from Barclays in the approximate sum of €165 million.

In support and as an integral part of the above claims, ENPAM also claims as follows:

In addition to the claims against Barclays as set out above, ENPAM also advances claims against Barclays’s employees, Giorgio Carone and Guido Contesso, and three corporate entities (i.e. Xelo Plc, ECP International and Mittel, as earlier mentioned and respectively incorporated in Ireland, Luxembourg and Italy) also involved in the asset exchange transaction. As to those claims:

On 14 May 2015, a Defence was served by Barclays in the Milan proceedings disputing the jurisdiction of the Milan court and contesting liability on the merits with regard to all of ENPAM’s claims. So far as jurisdiction is concerned, Barclays acknowledges ENPAM’s assertions in the Italian Statement of Claim that the English jurisdiction clause contained in the Conditional Asset Exchange Letter is null and void and/or does not in any event cover ENPAM’s claims in the Milan proceedings, but Barclays denies the validity of these assertions: see e.g. paras 83, 85, 86(ii) and 88 of the Italian Defence.

On 14 May 2015, Mittel also served its Defence to ENPAM’s claims, together with a Cross-claim for an indemnity from Barclays in the event that it is held liable to ENPAM. In support of the Cross-claim, Mittel alleges that Barclays was exclusively responsible for selection of the CDO portfolio assets and was the only party who received any potential benefit from the asset exchange transaction.

Although the first procedural hearing in the Milan proceedings was fixed for 4 June 2015, Mittel applied for a postponement to allow it to serve its cross-claim on Barclays and enable Barclays time to serve its response. On 25 May 2015, Barclays filed a motion supporting the postponement. On the same day, the Milan court agreed to postpone the first hearing until 18 November 2015. On 27 May 2015, ENPAM filed a motion seeking to overturn the decision to postpone the first hearing. In its supporting brief, among other things, ENPAM argued that the true reason for Barclays’ motion was that it wanted to delay the Milan proceedings while it sought to convince this court not to stay the English proceedings. ENPAM also reiterated its arguments as to the validity and scope of the English jurisdiction clauses contained in the contractual agreements between Barclays and ENPAM. On 3 June 2015, however, the Milan court affirmed the postponement of the first hearing to 18 November 2015.

On 15 September 2014, Barclays issued a Claim Form, later supported by Amended Particulars of Claim dated 29 October 2014, by which it claimed as follows:

For the purposes of this hearing only, ENPAM accepts that the English court has jurisdiction to hear these claims under Article 23 of the Judgments Regulation (which gives jurisdiction to the court agreed in a jurisdiction agreement).

There are two principal agreements between the parties upon which argument centred at the hearing.

The terms of the transaction were set out in the Conditional Asset Exchange Letter from ENPAM to Barclays dated 21 September 2007 referred to above (referred to below as the “Letter Agreement”).

By clause 6, “Governing law and jurisdiction”:

“This letter is governed by and interpreted in accordance with English law. The parties hereby agree that the courts of England are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this letter.”

Though it is the jurisdiction clause that is of primary importance for present purposes, it is convenient at this point to note also clause 4 (ix) (indemnification) by which:

“ENPAM agrees to indemnify and hold Barclays harmless from and against all losses, damages, liabilities, claims, costs, charges and expenses which Barclays may incur by reason of any breach of ENPAM’s obligations pursuant to this Letter or in case of any of the representations and warranties provided by ENPAM under this Letter being inaccurate or untrue.”

Following the coming into effect of MiFID (the Markets in Financial Instruments Directive) Barclays introduced a Professional Client Agreement including Terms of Business (the “PCA”). A letter of consent was signed by ENPAM’s chairman dated 31 March 2008.

As to governing law, the PCA provided in clause 21.1 of Module L that transactions subject to market rules were to be governed by the law applicable under those rules, and subject to that, the PCA was to be governed by and construed in accordance with English law.

As regards jurisdiction the PCA jurisdiction clause at clause 21.3 of Module L of the PCA provides as follows:

“… each of the parties irrevocably:

(a)

agrees for [C’s] benefit that the courts of England shall have jurisdiction to settle any suit, action or other proceedings relating to this Agreement (“Proceedings”) and irrevocably submits to the jurisdiction of such courts (provided that this shall not prevent us from bringing an action in the courts of any other jurisdiction); and

(b)

waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court and agrees not to claim that such Proceedings have been brought in an inconvenient forum or that such court does not have jurisdiction over it.”

The PCA contained in clause 19.7 of Module K an indemnity by ENPAM to Barclays in the following terms:

“You shall pay to us such sums as we may from time to time require in or towards satisfaction of any debit balance on any of your accounts with us and, on full indemnity basis, any losses, liabilities, costs or expenses (including legal fees), taxes, imposts and levies which we may incur or be subjected to with respect to any of your accounts or any Transaction or any matching Transaction on a Market or with an intermediate broker or as a result of any misrepresentation by you or any violation by you of your obligations under this Agreement (including any Transaction) or by the enforcement of our rights.”

ENPAM’s application is based on Article 27 alternatively Article 28 of the Judgments Regulation which provides as follows:

“Article 27

1.

Where proceedings involving the same cause of action and between the same parties are brought in the courts of different member states, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.

2.

Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court.

Article 28

1.

Where related actions are pending in the courts of different member states, any court other than the court first seised may stay its proceedings.

2.

Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof.

3.

For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.”

It is not in dispute that both the English and the Milan proceedings are between the same parties. It is in dispute that such proceedings involve the “same cause of action” under Article 27. It is not in dispute that the proceedings are “related” within the meaning of Article 28.

It may be noted that the Judgments Regulation has been repealed as from 10 January 2015 by Regulation (EU) No. 1215/2012 (the Recast Judgments Regulation). From that date, the jurisdictional rules are significantly altered by giving primacy to the parties’ chosen court to determine jurisdiction.

Article 31.2 of the Recast Judgments Regulation provides that “…where a court of a Member State on which an agreement … confers exclusive jurisdiction is seised, any court of another Member State shall stay the proceedings until such time as the court seised on the basis of the agreement declares that it has no jurisdiction under the agreement".

However, the proceedings at issue in this case are governed by the 2001 Judgments Regulation, having been commenced prior to 10 January 2015.

Article 27 - proceedings involving the same cause of action

ENPAM’s claims in the Milan proceedings comprise assertions as to:

Barclay’s claims in the English proceedings are based on the (at least implicit) assertion that:

The two sets of claims have identity of cause and object for the purposes of Article 27. In particular:

Both sets of proceedings thus put in issue – and have or include as their objet – the validity of the contractual agreements between the parties and the validity and/or scope of the jurisdiction and indemnity clauses contained in those agreements.

It also appears that Barclays would seek to rely on a judgment of this Court declaring that ENPAM’s claims in the Milan proceedings are within the scope of the English jurisdiction clauses as a conclusive answer to ENPAM’s assertions in the Milan proceedings that none of its claims are subject to the jurisdiction of this Court.

In The Alexandros T:

It is plain that the Milan proceedings are the mirror image of the English proceedings.

Though ENPAM’s claims of nullity in the Milan proceedings are characterised as “secondary” to the “main” claim for damages or compensation in the Italian Statement of Claim, the nullity claims (with respect to both the underlying contractual agreements and the English jurisdiction clauses) are based on the same grounds as the main claim and are as financially important. The secondary or alternative nature of the nullity claims should not therefore materially detract from the identity of cause of action as between the Milan and English proceedings.

Moreover, the court is required to treat the claims separately, and to apply Article 27 separately (The Tatry and see Erich Gasser, at [51], [67] and [72]).

Though ENPAM’s assertions as to validity and scope of the English jurisdiction clauses arise in the context of its jurisdictional claims in the Milan proceedings, this does not detract from the identity of cause of action for the purposes of Article 27. ENPAM’s challenge to the validity and scope of the English jurisdiction clauses is an integral and essential part of its claims in the Milan proceedings because: (1) ENPAM’s claims cannot be successfully pursued unless it establishes that its claims are not caught by the English jurisdiction clauses; and (2) under Italian procedure, jurisdiction and merits are generally tried at the same time, and assertions as to jurisdiction, including as to the validity or otherwise of any relevant jurisdiction clauses, are therefore advanced in the claimant’s statement of claim as part of the claim.

ENPAM’s assertions of the nullity of the contractual agreements are alleged to extend to the English jurisdiction clauses contained in those agreements on identical grounds. These assertions of nullity also necessarily imply nullity of the indemnity clauses. ENPAM’s case as to the nullity of the English jurisdiction and indemnity clauses is therefore an aspect of and inextricably linked with its substantive case (as part of its secondary claims) as to the nullity of the contractual agreements and asset exchange transaction as a whole. ENPAM’s assertion of nullity of the English jurisdiction and indemnity clauses can properly be seen as being part of its substantive case of nullity of the contractual agreements between the parties and all of the terms of those agreements – which is the mirror image of Barclays’ substantive case as to the validity of the contractual agreements, including the jurisdiction and indemnity clauses contained in those agreements, in the English proceedings.

It would be anomalous if Article 27 was not engaged:

ENPAM’s alternative argument - reference to the CJEU

Alternatively, difficult questions arise under Article 27 regarding (1) whether, where one of the parties relies in proceedings in one Member State on a jurisdiction clause as the basis for a claim of breach of the jurisdiction clause and the other party challenges the validity of the jurisdiction clause in proceedings in the court of another Member State, the two proceedings involve the same cause of action for the purposes of Article 27; and (2) whether the answer is affected by whether the dispute as to the validity and application of the jurisdiction clause arises in either of the proceedings in the context of claims or arguments by the claimant as to the jurisdiction of the Court. Such questions are deserving of a reference to the CJEU.

Article 28 – existence of related actions

If contrary to the above the Milan and English proceedings do not involve the same cause of action for the purposes of Article 27, they nevertheless constitute related actions given (1) the overlap of issues as to the validity of the underlying contractual agreements between the parties and as to the validity of the indemnity and jurisdiction clauses contained in those agreements, and (2) the obvious risk of conflicting decisions on those issues as between the two sets of proceedings.

In its discretion, and having regard to the strong presumption in favour of a stay, the Court should stay the English proceedings – further, since it would be open to Barclays to cross-claim in the Milan proceedings for the relief it is seeking in the English proceedings, the Court should decline jurisdiction under Article 28(2).

There are common issues as to the validity of the underlying contractual agreements and related indemnity and jurisdiction clauses;

In summary, Barclays’ position on the Jurisdiction Application is as follows:

Article 27

The English proceedings manifestly do not have the same cause or objet as the Italian proceedings, and accordingly Article 27 does not apply.

In order to mount its case on Article 27, ENPAM is forced to mischaracterise the nature of both sets of proceedings (impermissibly merging the concept of “claims” with “issues”).

In particular, the essence of ENPAM’s case is that both the Italian and the English proceedings involve the same cause of action “because the validity and/or scope of the contractual agreements, including the jurisdiction and indemnity clauses contained in those agreements are at the heart of the dispute in both [actions]”. This is wrong, as a comparison of the Italian Statement of Claim in the Milan proceedings and the Amended Particulars of Claim in these proceedings reveals.

In fact, ENPAM’s primary claim in the Milan proceedings is for compensation / damages for breach of Articles 1337 (concerning obligations of good faith in negotiations) and/or 2043 of the Italian Civil Code (which is concerned with tortious liability). No doubt this was deliberate - the primary claim is the only claim considered by the Civil Court of Milan for the purposes of establishing that court’s jurisdiction. That tortious claim does not involve any challenge to the contracts made between ENPAM and Barclays – and it cannot be analysed as the “mirror image” of the contractual claims in the English proceedings.

Neither can ENPAM’s secondary claims be so described. ENPAM contends (in the alternative) that one of the two contracts it made with Barclays (the Letter Agreement) is void as a matter of Italian Law. This alternative claim is plainly not identical to the claim for breach of the exclusive jurisdiction clauses in the English proceedings nor is the latter claim encompassed within the former. The key point is that even if ENPAM succeeded in establishing (in the Milan proceedings) that the Letter Agreement was void, that would not affect the validity of the jurisdiction clause within that contract: “a jurisdiction clause, like an arbitration clause, is a separable agreement from the agreement as a whole” (Deutsche Bank AG v Asia Pacific BroadBand Wireless Communications Inc [2009] 2 All ER (Comm) 129 at [24]).

Moreover, since ENPAM has not challenged the validity of the other agreement it made with Barclays (the PCA) the claims in the English proceedings under that agreement are plainly not reflected in the Milan proceedings.

It follows that the two sets of proceedings clearly do not have the same cause nor do they have the same objet.

Since there is no doubt about the proper application of Article 27 in this case there is no reason for a reference to the European Court. The English Court is well placed to determine the relevant issues.

Article 28

It is common ground that the two sets of proceedings are related within the meaning of Article 28. It is therefore for ENPAM to persuade the court to exercise its discretion to stay the English proceedings. Barclays submits that the court should not do so: the Milan proceedings have been brought in breach of the exclusive jurisdiction clauses (which militates strongly against the grant of a stay) and the English court is best placed to determine and most proximate to questions of how the exclusive jurisdiction clauses (which are governed by English law) should be interpreted and can do so very swiftly. The Civil Court of Milan will then have the benefit of the English court’s decision.

The applicable principles

Under the Judgments Regulation, where Article 27 applies, the court second seised must cede jurisdiction to the court first seised, even in the face of an exclusive jurisdiction clause in favour of the former.

It is not in dispute that the proceedings in Milan and England are between the same parties. It is in dispute that such proceedings involve the same cause of action under Article 27.

The leading authority in this jurisdiction is the decision of the Supreme Court in Starlight Shipping Co v Allianz Marine & Aviation Versicherungs AG (“The Alexandros T”) [2014] 1 All ER 590. The decision upholds the right under English law of a party to a contract to obtain damages from the other contracting party if it brings proceedings in tort in another Member State in breach of an express jurisdiction clause. Barclays contends that the decision is directly applicable to the present case.

In summary, the facts were that there was a settlement agreement between the owners of a vessel and their insurers. The insurance policies and the settlement agreements contained exclusive English jurisdiction clauses. Subsequently, the owners commenced proceedings in Greece against the insurers. The insurers commenced proceedings in England similar to those issued by Barclays in this case. The Court of Appeal held that the English proceedings should be stayed under Article 27 of the Judgments Regulation.

Reversing that decision, the Supreme Court held that (a) save in relation to the claim for a declaration that the Greek claims had been settled, the English proceedings did not involve the same cause of action as the Greek proceedings for the purposes of Article 27; (b) the question whether the claim for a declaration needed to be stayed under Article 27 would be referred to the CJEU (the insurers subsequently abandoned that claim); and (c) although the proceedings were related and the Greek court was arguably first seised, the court would not, in the circumstances of the case, exercise its discretion for the English proceedings to be stayed under Article 28.

The principles as to the meaning of the words “same cause of action” in Article 27 as developed in the European and English case law were summarised in The Alexandros T at [28], [29] and [30] and taken with other authority are common ground between the parties and may be stated as follows:

Where a party has sued a defendant in England for breach of an exclusive jurisdiction clause and there are prior substantive proceedings ongoing in another Member State, the position was summarised in the The Alexandros T at [38] as follows:

“There is an established line of cases in England to the effect that claims based upon an alleged breach of an exclusive jurisdiction clause or an arbitration clause are different causes of action from claims for substantive relief based on a breach of the underlying contract for the purposes of … art 27 of the Regulation …”.

As it is put in Briggs, Civil Jurisdiction and Judgments (ibid at [2.266]):

“It follows from this that if proceedings are brought in England for damages for breach of a jurisdiction agreement, and proceedings are brought before the courts of another Member State in respect of a cause of action which fell within the jurisdiction agreement, the proceedings do not have the same cause (because the contractual term relied on as the basis for the two proceedings are distinct) or the same objet (as the relief sought is quite different).”

Finally, it is well established in both domestic and European law that a jurisdiction clause, like an arbitration clause, is a separable agreement from the agreement as a whole:

“ … a jurisdiction clause, like an arbitration clause, is a separable agreement from the agreement as a whole. This is uncontroversial both as a matter of domestic law (see Mackender v Feldia [1967] 2 QB 590 and Fiona Trust v Privalov [2008] 1 Lloyds Rep 254; [2007] Bus LR 1719) and as a matter of European law (see Benincasa v Dentalkit SRL [1997] ECR 1-3767 and Briggs, Civil Jurisdiction and Judgments (4th ed. 2005) para. 2 105 esp. at page 131). It follows that disputes about the validity of the contract must, on the face of it, be resolved pursuant to the terms of the clause and, indeed, the last sentence of the clause expressly so provides. It is only if the jurisdiction clause is itself under some specific attack that a question can arise whether it is right to invoke the jurisdiction clause. Examples of this might be fraud or duress alleged in relation specifically to the jurisdiction clause. Another example might be if the signatures to the agreement were alleged to be forgeries, although no authority has so far so stated. Even in such a case someone has to decide whether the signatures were in fact forged. It might well be thought that a mere allegation to that effect could not have the effect of rendering a jurisdiction clause inapplicable.” (Deutsche Bank AG v Asia Pacific Broadband Wireless Communications Inc [2009] 2 All ER (Comm) 129 at [24])

It may be noted that this principle is confirmed in Article 25 of the Recast Judgments Regulation which provides in Article 25.5 that “An agreement conferring jurisdiction which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. The validity of the agreement conferring jurisdiction cannot be contested solely on the ground that the contract is not valid.”

Application of the principles to the present case

Applying the above principles, the court’s first task is to compare the claims in the Milan and English proceedings. I refer in this regard to the detailed analysis of the two set of proceedings set out above. I was also taken through the Italian Statement of Claim at the hearing, and have kept in mind the totality of the document.

In Milan, ENPAM’s “main claim” consists of damages in respect of “pre-contractual liability” and “extra-contractual liability”. It is not in dispute that this is to be analysed as a claim for damages in tort. Jurisdiction is asserted on the basis of Article 5(3) of the Judgments Regulation, which deals with matters relating to tort, delict, or quasi-delict, and provides that in relation to such matters, the courts for the place where the harmful event occurred have jurisdiction.

I do not think it was maintained by ENPAM in oral submissions that the main claim in tort itself involves the same cause of action as the English proceedings, which concerns breach of contract in respect of the jurisdiction agreements. I am satisfied that it does not. I do not accept the submission that ENPAM’s challenge to the validity and scope of the English jurisdiction clauses is an integral and essential part of its claims in the Milan proceedings. I consider that there is no such challenge as regards the main claim.

In the “secondary claims” in the Milan proceedings, ENPAM relies on the same vitiating factors as in the case of the main claim (absence of a written framework agreement, failure to reserve a right of withdrawal in the contractual documentation and/or non-registration of persons said to be financial promoters). As ENPAM points out however, the relief claimed is different, consisting of a claim for nullity, cancellation, or termination, together with consequential restitution.

As regards jurisdiction in respect of the “secondary claims”, it is to be noted that the Italian Statement of Claim places reliance on a decision of the Supreme Court of Cassation to the effect that where a claimant makes a main and a secondary claim against foreign defendants, as in this case, jurisdiction is determined with exclusive reference to the main claim. Jurisdiction is in this sense parasitic on the main claim.

In argument, ENPAM drew attention in particular to pages 45 and 47-48 of the English translation of the Italian Statement of Claim. Reference is made there to exclusion of the possibility of a choice of jurisdiction other than that where the unlawful conduct was adopted and the damage occurred (which is a reference to the tortious jurisdiction), it being stated that English jurisdiction as envisaged in the Letter Agreement would not justify departure from Italian jurisdiction, given the nature of ENPAM’s main claim.

On this basis, ENPAM contends that the secondary claims at least in the Milan proceedings do involve an attack on the validity of the agreements between Barclays and ENPAM, including, it contends, the jurisdiction and indemnity clauses. The attack on the validity of the agreements distinguishes the present case, it is contended, from The Alexandros T, in which case there was no such attack in the Greek proceedings.

In this regard, the most important consideration in my view is that it is established in both domestic and European law that a jurisdiction agreement, like an arbitration agreement, constitutes an agreement separate from the contract in which it is incorporated. The authorities are set out above—Benincasa v Dentalkit SRL [1997] ECR 1-3767 is the main European authority and is referred to in the above quotation from the Deutsche Bank v Asia Pacific case.

The fact that there is an attack on the validity of the substantive agreements does not therefore equate to an attack on the separate jurisdiction agreements which are the subject of the English proceedings. In an Italian Statement of Claim which is clearly carefully drafted with cognisance of the jurisdiction clauses, Barclays submits, and I agree, that there is no such attack.

I further accept the contention of Barclays that neither the main claim nor the secondary claim in the Milan proceedings “mirrors” the English proceedings. As is pointed out, the central dispute in the English proceedings, namely as to the scope of the relevant jurisdiction clauses, is not mentioned in ENPAM’s requests for relief in the Milan proceedings. It is asserted, correctly in my view, that when one looks at the Italian Statement of Claim, the jurisdiction clauses only receive a “passing reference”.

Further, whereas the objet of the English proceedings have as the end in view the recovery of damages for breach of the jurisdiction clauses, the objet in the Italian proceedings is different—namely, damages in tort (main claim), and restitution on the basis of the nullity of the substantive agreements (secondary claim).

There is a further point as follows. Barclays relies on two agreements containing indemnity and jurisdiction provisions, namely the Letter Agreement and the PCA. It is common ground that whilst there is a reference to the Letter Agreement in the Italian Statement of Claim there is no express reference to the PCA. It was suggested on behalf of ENPAM that the PCA was included by the reference in the Italian Statement of Claim to the nullity of the Letter Agreement “and of the subsequent agreements between the parties, thus of the entire deal”.

I do not think that this can be correct. There is a list of documents at the end of the Italian Statement of Claim, and the Letter Agreement is referred to along with certain subsequent letters and supplements. There is no reference to the PCA at all. I accept Barclays’ submission that the reference to “subsequent agreements” and to the “entire deal” is a reference to subsequent restructuring documents rather than the separate and distinct client agreement in the PCA. On this basis, there is no challenge in the Milan proceedings to the PCA, or to the jurisdiction agreement which it contains.

I consider that the reasoning in The Alexandros T is applicable to the present case. I do not accept ENPAM’s submission that this result would infringe any overarching principle of EU law. Once it is recognised that a “an agreement conferring jurisdiction which forms part of a contract shall be treated as an agreement independent of the other terms of the contract” (see Article 25.5 of the Recast Judgments Regulation) that point goes.

So far as a reference to the Milan defences is permissible, I do not consider that Barclays’ defence assists ENPAM’s case. The defence notes that ENPAM’s argument is that the jurisdiction clause in the agreement is ineffective because the agreement containing it should be considered null and void according to Italian law. This does not evidence any perception on the part of Barclays that ENPAM contends that the jurisdiction agreement should independently be considered null and void.

However, in my view the position as regards the indemnity is arguably different. The indemnity provisions, unlike the jurisdiction provisions, do not constitute separate agreements. Whilst in The Alexandros T the Supreme Court held that the English claims for an indemnity did not fall within Article 27, there was, as ENPAM points out, no challenge in the Greek proceedings to the validity of the substantive agreements.

In the course of the hearing, Barclays appeared to leave open its position as to the scope of the indemnity. Whilst asserting that it applied in respect of legal costs incurred in the Milan proceedings, it did not exclude the possibility that the indemnity might extend to substantive recoveries against the bank in the Milan proceedings. In those circumstances, it seems at least arguable, or to put it another way the contrary is not acte clair, that the claim for an indemnity under the Letter Agreement in the English proceedings is the “mirror image” of the secondary claims based on the asserted nullity of the Letter Agreement in the Milan proceedings. This is because it would (if successful) require the repayment of sums awarded in the Milan proceedings, and thus result in a circularity.

Had the point been pursued, I would have been inclined to think that a reference of this question to the CJEU would require to be considered. In the light of exchanges to this effect during the hearing, Barclays made it clear that it would not pursue the indemnity contained in the Letter Agreement in the English proceedings.

In conclusion, I do not consider that Article 27 applies to Barclays’ claim in the English proceedings, since these proceedings do not have “le même objet et la même cause” as those in Milan. This might arguably be the case in respect of the claim for an indemnity under the Letter Agreement, but since Barclays is not proposing to pursue that claim, it is not necessary to consider further the possibility of a reference to the CJEU.

It is not in dispute that the Milan proceedings and the English proceedings constitute related actions within the meaning of Article 28.

ENPAM’s case in favour of a stay or this court declining jurisdiction, and Barclays’ case in opposition, is set out above.

ENPAM submits that in its discretion and having regard to the strong presumption in favour of a stay, the court should stay/decline jurisdiction in the English proceedings because of common issues with the Milan proceedings, the risk of conflicting decisions on these issues, fundamental principles relating to the court first seised, and the factual and legal proximity with Italy. Since Barclays faces a cross-claim by an Italian defendant, it will be a party to the Milan Proceedings in any event, and can claim the relief that it is presently claiming in the English proceedings in the Milan proceedings, which are more advanced.

In my view, the common issues in the proceedings are not substantial. There would have been the risk of a conflicting decision as regards the indemnity in the Letter Agreement, but as discussed above, this claim is not being pursued by Barclays. Although the matters raised in the Italian Statement of Claim do have a factual and legal proximity with Italy, the claims in the English proceedings do not. The fact that Barclays will be a party to the Milan proceedings in any event and can claim the relief that it is presently claiming in the English proceedings, does not appear to me to carry much weight.

In my view, the main factors are as follows.

In the circumstances, the parties having agreed an exclusive jurisdiction clause, Barclays should not be shut out from pursuing a case for breach of the clause in the parties’ chosen forum. A stay of the English proceedings under Article 28 is therefore refused.

As noted above, on 31 July 2015 Flaux J ordered that the summary judgment application be heard at the same hearing as ENPAM’s jurisdiction application, subject always to the directions of the judge hearing the applications.

Following that order, ENPAM filed further evidence, and submitted a skeleton argument prior to the hearing setting out its case in respect of Barclays’ application for summary judgment. However, its primary case is that the court should not hear the summary judgment application until determining the jurisdiction application. The hearings should, it submits, not take place at the same time.

In this regard, it cites the judgments in Speed Investments Ltd v Formula One Holdings Ltd [2005] 1 WLR 1233, and Rishal Moloobhoy v Shams Mohamed Kanani [2012] EWHC 1670 and [2013] EWCA Civ 600 (CA).

The initial question arose in the hearing whether it was appropriate for the court to hear the application even on a de bene esse basis as Barclays suggested. Since all parties were present, and since I had already received, and been invited to read, the parties’ written submissions on summary judgment, I indicated that it would be sensible to hear their oral submissions as well, and give my decision on the point of principle later. I note that a similar course was adopted by Stephen Males QC (sitting as a deputy High Court Judge) in similar circumstances in the Moloobhoy case at [77].

Turning to the substantial issue, it was held in Speed that where a defendant challenges the jurisdiction of the court and the claimant makes an application for summary judgment, although the court has power to hear the claimant’s application before or concurrently with the jurisdictional challenge, the power will be exercised only in rare cases. The price of being able to bring foreign defendants before the court is that they should have a real opportunity to decide whether to submit to the jurisdiction.

In Moloobhoy, the Court of Appeal upheld the first instance decision to determine the summary judgment application when ruling on jurisdiction. The court pointed out that logically, the principles apply at the earlier stage when the court gives a direction which permits this course to be taken.

It was submitted on behalf of Barclays that notwithstanding the test set out in Speed, this course need not be seen as exceptional in the context of European rules as to jurisdiction. There may be force in this, but I consider that I should apply the established test. Accordingly, the question is whether this is one of those rare cases in which questions of jurisdiction and summary judgment can be decided at the same time.

The position in this case is that ENPAM had not only served its evidence in relation to the summary judgment application by the time of the hearing, but also submitted its skeleton argument, albeit in both instances under protest. I was concerned lest there be some prejudice to ENPAM in proceeding at this stage—that would have been decisive. But it was very properly explained on ENPAM’s behalf that there was no further evidence to be served, and that its submissions were complete. Its contention that the court should not proceed to hear the summary judgment application was advanced as a matter of principle.

However, in applying principle, account has to be taken of the obvious sense in proceeding with an argument for which both sides were fully prepared, in a case in which the parties are already present through their representatives in court, with all the duplicative expense that another hearing would entail. This is not a case in which ENPAM has submitted that it would wish to have the option of allowing judgment to go in default. Although ENPAM questioned at the outset whether there would be sufficient time within that allotted to the hearing, in fact there was ample time. In all the circumstances, I conclude that the facts of the case are out of the usual, raising questions as to the relationship between proceedings in two jurisdictions in a particular context, as indeed has been ENPAM’s contention in relation to the jurisdiction issue. It is not in dispute that the court has power to hear the summary judgment application at this stage, and I consider that it is one of those very rare cases in which it should do so.

Barclays contends that the commencement of the Milan proceedings by ENPAM constituted a clear breach of its obligations under the exclusive jurisdiction clauses in the Letter Agreement and the PCA. No defence, it says, has been disclosed by ENPAM.

Barclays seeks on a summary basis a declaration that the claims made by ENPAM against Barclays in the Milan proceedings are within the scope of the jurisdiction clauses in the Letter Agreement and in the PCA.

It further seeks a declaration that the bringing and continuing of the Milan proceedings by ENPAM is in breach of these jurisdiction clauses.

It further seeks a declaration that pursuant to the indemnity clauses, ENPAM is liable to indemnify Barclays for any damages, liabilities, claims, costs, charges or expenses incurred by it by reason of ENPAM’s breach of the jurisdiction clauses. Barclays seeks an order that judgment be entered in its favour on liability, the determination of quantum to be subject to directions.

On its part, ENPAM submits that it has real prospects of successfully defending the claims in circumstances where:

I do not think that it is in dispute that the Milan proceedings falls within the language of the jurisdiction clauses. The matters encompassed in those proceedings clearly “arise out of or in connection with” the Letter Agreement, and “relate to” the PCA. The question, therefore, is whether there is a real prospect of ENPAM successfully defending Barclay’s claims for breach of these clauses. To the extent that there is, the summary judgment application will fail.

My conclusions as to the five defences raised by ENPAM are as follows.

First, ENPAM submits that the court should refuse to entertain a claim for breach of an English jurisdiction clause when under EU law (as exemplified by the well-known decisions in Turner v Grovit [2005] 1 AC 101 and West Tankers Inc v Allianz SpA [2009] 1 AC 1138) the foreign proceedings alleged to be pursued in breach of the jurisdiction clause cannot and should not be prevented by means of an anti-suit injunction.

ENPAM argues that the jurisdiction of the other Member State court would be interfered with because the English declaratory judgment would compel it to determine the issue as to the jurisdiction clause in the same way that the English court did, and a monetary judgment would nullify the financial effect of its decision if it differed from the English decision.

ENPAM accepts that the decision of the Court of Appeal subsequent to the Supreme Court’s decision in TheAlexandros T rejected the argument that claims for a declaration and/or for damages and/or for indemnities with respect to an alleged breach of an English jurisdiction clause would infringe EU principles of mutual trust and non-interference with the jurisdiction of other Member State Courts.

However, ENPAM submits that the distinction is that in TheAlexandros T, there was no attack made in the Greek proceedings on the validity of the English law agreements.

In my view, this point was determined by the Court of Appeal—the analogy with anti-suit injunctions was specifically rejected at [2014] 2 Lloyd’s Rep 544 at [15].

In this context, the fact that in TheAlexandros T no attack was made on the validity of the English law agreements does not appear to me to be a relevant consideration.

The assertion that the “mutual trust” principle applies independently of Articles 27 and 28 does not afford a defence either in my view. In this regard, it is relevant to note that under the Recast Judgments Regulation, albeit not in force at the time of issue of the Milan proceedings, primacy as to determination of the jurisdictional issue is given to the court identified in an exclusive jurisdiction clause.

The financial effect of a decision in Barclays’ favour remains to be determined. It is not determined by this decision, and this cannot constitute a defence.

Accordingly, I do not consider that ENPAM has an arguable defence on the first ground.

Second, it is submitted that on the particular facts of the case and having regard to Barclays’ own pleaded case, the jurisdiction clause that applies to disputes concerning the transaction between Barclays and ENPAM is the PCA jurisdiction clause. Properly construed, this clause confers jurisdiction, but not exclusive jurisdiction upon the English courts. Since the jurisdiction of the English court is not exclusive, ENPAM submits that its pursuit of its claims in the Milan proceedings does not amount to a breach of the applicable jurisdiction clause.

I proceed on the basis that for summary judgment purposes, ENPAM is right to say that the PCA jurisdiction clause is the effective one. This clause is set out above. As is frequently agreed for good practical reasons in financing transactions, it stipulates that exclusivity in favour of one court does not prevent the financing institution from bringing an action in the courts of any other jurisdiction.

There was a short debate in the skeleton arguments to whether such a clause can be regarded as “exclusive”. The authority cited by Barclays was Continental Bank v Aeakos [1994] 1 WLR 588 at 594 C-F. Although not identical, the jurisdiction clause in that case (see p. 591 H) is structured similarly to that in the PCA. Barclays argues that though the clause does not expressly provide that it is “exclusive”, on its proper construction it is clear that it is exclusive as regards ENPAM.

I would accept this submission (for a contemporary discussion see Jurisdictional Choices in Times of Trouble, ed Georges Affaki and Horacio Grigera Naón, ICC, 2015, and see Mauritius Commercial Bank Ltd v Hestia Holdings Ltd  [2013] EWHC 1328 (Comm)).

However, the issue for decision in the present case is a more limited one. Regardless of how the clause is characterised in terms of exclusivity, the issue is whether ENPAM is right to say that it is not in breach of it by pursuing proceedings in the Milan courts. In the Continental Bank case the court concluded that the clause at issue there evinced a clear intention that the defendant (though not the bank) was obliged to submit disputes in connection with the loan facility at issue to the English courts.

I consider that the same construction should be placed upon the jurisdiction clause in the PCA. I do not accept ENPAM’s submission that the supposed “non-exclusivity” of the clause means that the bringing of proceedings relating to the PCA by ENPAM in the Milan court is not a breach of the jurisdiction agreement. In my view, it clearly is a breach.

Third, ENPAM submits that even if Barclays was entitled under either the jurisdiction clause in the Letter Agreement or the PCA to insist that ENPAM sued it in the English courts only, Barclays waived that entitlement by reason of its voluntary participation in a mediation procedure under Italian procedural law in parallel with the commencement of the Milan proceedings by ENPAM. It submits that Barclays has at least arguably waived its rights by reason of its voluntary participation, without jurisdictional reservation, in a mediation procedure which is a pre-condition under Italian procedural law to the pursuit of claims in legal proceedings in Italy.

The evidence is largely not in dispute. Under compulsory pre-trial mediation procedures, ENPAM requested mediation on 12 June 2014. On 22 July 2014, Barclays gave its formal agreement to participate. The mediation meeting took place on 22 July 2014, by which time Barclays had been provided with a copy of the Milan Statement of Claim. The mediation was unsuccessful, and according to the minutes made by the mediator, after discussion, ENPAM declared that it did not wish to proceed with mediation, while Barclays said that they were willing to do so. In the circumstances, the mediator closed the mediation procedure.

Initially, ENPAM’s evidence for this hearing was to the effect that at no stage during the mediation procedure did Barclays object to the jurisdiction of the Milan court or express a jurisdictional reservation in favour of the English courts.

Barclays then filed evidence from two of its lawyers who were present to the effect that although no jurisdictional reservation was necessary because the mediation process was separate from court proceedings, it was made clear to the mediator that Barclays disputed Italian jurisdiction and asked the mediator to mention this in the minutes. The mediator however stated that this reservation was unnecessary in the context of a mediation, and it was not his practice to mention such matters in the minutes.

ENPAM’s case at the hearing was adapted accordingly to the effect that Barclays’ written agreement to participate in the mediation did not contain any jurisdictional reservation, and to be effective such reservation would have required communication to ENPAM.

On this issue, I much prefer the evidence filed on behalf of Barclays to the effect that as a matter of Italian law participation in a mediation required by law prior to or at the outset of legal proceedings does not amount to a submission to the jurisdiction of the Italian courts. This would run counter to the aim of these relatively new provisions of Italian law, which are designed to encourage parties to settle without recourse to the courts.

However, the decisive point on the evidence is that there is no serious dispute that Barclays did in fact reserve its position orally. There is no cogent evidence before the court that, if reservation was required at all, such oral reservation was not effective. I conclude that the waiver defence is not arguable.

Fourth, it is submitted that the jurisdiction clauses should be construed in accordance with Italian law, being the law applicable to both the underlying contractual agreements and the jurisdiction clauses contained in those agreements pursuant to the provisions of Article 3(3) of the Rome Convention on the Law Applicable to Contractual Obligations which gives precedence where all elements (other than choice of law) are connected with one country to the “mandatory rules” of law of that country.

However, it was accepted in the course of argument that the Rome Convention is irrelevant to the law governing exclusive jurisdiction clauses because it does not apply to “arbitration agreements and agreements on the choice of court”: see Article 1(2)(d). (It is to be noted that the same provision appears in Article 1(2)(e) of Council Regulation (EC) No. 593/2008 (Rome I) in respect of contracts concluded after 17 December 2009.) This point was not seriously pursued.

Fifth, ENPAM submits that Barclays is not entitled to an indemnity unless it can be demonstrated that it will suffer damage by reason of the alleged breach of the jurisdiction clauses. It contends that Barclays relies on the indemnity not only to cover its legal costs in the Milan proceedings, but also any liability that it may incur in those proceedings. However, ENPAM contends, such loss may be illusory if ENPAM’s claims would succeed if brought in the English courts.

Barclays submits that the claim for damages and/or an indemnity follows inexorably if ENPAM’s breach of contract is established. It points out that the indemnity clauses at issue in TheAlexandros T were upheld.

My conclusions in this regards are as follows. For reasons set out above, the indemnity claim based on the Letter Agreement will not go forward for jurisdictional reasons. The summary judgment application relates therefore to the indemnity clause in the PCA.

During the hearing, it was not evident how wide Barclays contends that the indemnity clause goes. Whilst asserting that it covers legal costs, its position as regards liability was not fully explained.

I prefer ENPAM’s submissions in this respect. As it submitted, it is not in dispute that Barclays has the benefit of the indemnity in the PCA. The issue is whether it should have summary judgment for a declaration to this effect at this stage of the proceedings. Doubtless Barclays is right to say that this would normally follow. However, on the facts I consider that a cautious approach is the right one. There is no need for the court to make a declaration at this stage, and there are reasons for not doing so when the ambit of the clause is unclear.

Though it was suggested that a declaration should at least be given as regards the applicability of the indemnity to legal costs, I do not think that this would be satisfactory. Before the court summarily grants a declaration in relation to the indemnity, there should be clarity as to its ambit.

There will not be a stay under Article 27 (the claim in relation to the Letter Agreement indemnity not being pursued), or under Article 28. Barclays is entitled to summary judgment except in relation to its claim for an indemnity under the PCA. I am grateful to the parties for their assistance, and will hear them as to any consequential directions.