In our previous article, we discussed the merits judgment in Dexia SA v Comune di Torino (see here). That article sets out the background to the Italian swaps litigation and the court's findings on validity. This article revisits the jurisdictional issues addressed earlier in the case and the questions that remain unanswered.
Butcher J’s 2025 judgment on jurisdiction in Torino remains one of the most important decisions in the Italian swaps litigation to date. It confirmed what Brexit had thrown into doubt: that the standard jurisdiction clause in the 1992 ISDA Master Agreement is exclusive as against EU member states. Plenty of questions, however, are left open.
Alongside their challenges on the merits, Italian local authorities have repeatedly denied that the English court has jurisdiction at all. That issue turns in large part on the wording of the ISDA jurisdiction clause. The two versions most relevant to the Italian swaps litigation are the 1992 multicurrency-cross border Master Agreement1 and the 2002 Master Agreement. The wording differs materially between the two forms. Both submit disputes to the English courts where English law governs, but there is a difference in the mechanism that delivers exclusivity and the conditions under which it does so.
Under the 1992 Master Agreement, clause 13(b) makes English jurisdiction exclusive as against states bound by the Brussels or Lugano Conventions and non-exclusive otherwise. The mechanism is indirect. Clause 13(b) submits the parties to the non-exclusive jurisdiction of the English courts, but bars them from bringing proceedings in any "Contracting State" as defined by s.1(3) of the Civil Jurisdiction and Judgments Act 1982 and its modifications "for the time being in force". When Italian local authorities entered into swaps in the early 2000s, Italy was bound by the Brussels Convention. The clause was therefore exclusive as against the Italian court. Brexit raised the question whether Italy still qualified as a Contracting State once the UK had left the EU framework.
Under the 2002 Master Agreement, the analogous concept is the "Convention Court". English jurisdiction is exclusive only where the proceedings involve a court bound to apply Article 17 of the 1968 Brussels Convention or the 1988 Lugano Convention and non-exclusive in all other cases. The category of qualifying courts has always been narrow and is now narrower still: the Brussels I Regulation largely displaced the Brussels Convention as between EU member states2 and the 1988 Lugano Convention was in turn superseded by the 2007 Lugano Convention. No Italian court is a Convention Court for the purposes of clause 13(b), leaving the exclusivity of the 2002 clause in doubt.
The question of whether, post-Brexit, Italy still qualifies as a Contracting State for the purposes of the 1992 clause had never been squarely decided by the English court. Torino is the first decision in which the court has confronted it head-on.
Dexia and Torino entered into interest rate swap transactions between 2001 and 2006 under a 1992 multicurrency cross-border ISDA Master Agreement, governed by English law.
Torino issued proceedings in the Court of Turin in June 2024 and Dexia commenced its own proceedings in the English High Court in October 2024.
Torino withdrew from the English proceedings at an early stage. Butcher J nonetheless proceeded and granted Dexia partial summary judgment declaring that clause 13(b) of the 1992 ISDA Master Agreement conferred exclusive English jurisdiction over the swaps.
The determinative issue was the meaning of "Contracting State". The court held that the decisive question is whether the relevant state is bound by a qualifying Convention at the time of the litigation, not when the parties entered into the contract. The reason lies in the words "for the time being in force" in clause 13(b)'s reference to s.1(3) CJJA.
Italy qualifies on that test. The UK acceded to the 2005 Hague Convention on Choice of Court Agreements in its own right3 after Brexit and Italy is bound by it as an EU member state. That was enough to make Italy a Contracting State within the meaning of clause 13(b) and so to render the English jurisdiction clause exclusive as against Italy. The conclusion did not depend on the dates (the relevant transactions long pre-dated the Convention's entry into force in 2015), nor on the Convention itself applying to the dispute. Whether it did was a separate question on which Butcher J expressly assumed (without deciding) that the Convention did not apply.
Two further points are worth noting. First, the court found that the jurisdiction clause, construed under English law, is wide enough to cover pre-contractual, collateral and tortious claims, including those Torino had raised in Italy. Secondly, the court rejected Torino's argument that clause 13(b) was void because the rights in dispute were non-disposable (diritti indisponibili) under Italian law. Butcher J held that this is a question of the material validity of the jurisdiction agreement, which is governed by its applicable law (English law), not a question of capacity (which would have been governed by Italian law). Italian rules on non-disposability therefore have no bearing on the clause's validity. Had the argument succeeded, choice of court agreements in many derivatives entered into by Italian local authorities would have been void.
A number of jurisdictional questions are still left open. The most fundamental is whether the 2005 Hague Convention applies to disputes of this kind at all. Butcher J did not need to decide the point: he expressly assumed (without deciding) that the Convention did not apply and held that this made no difference to whether Italy was a Contracting State within the meaning of clause 13(b). The Convention applies to "international cases…in civil or commercial matters" and excludes a series of specific subject-matters. It is not yet settled whether claims that turn on a public body's capacity to contract, or on constitutional limits on its power to do so, are civil or commercial in this sense.
Assuming the 2005 Hague Convention does apply, the next question is whether the standard ISDA jurisdiction clause qualifies as an "exclusive choice of court agreement" of the kind the Convention protects. Butcher J expressly left this open. Torino establishes exclusivity as a matter of English law, but an English court’s interpretation of the contract is not, without more, binding on foreign courts. The 2005 Hague Convention would supply the missing link: where it applies, foreign courts must decline jurisdiction in favour of the chosen English court and must recognise and enforce the resulting judgment.
The difficulty is in the wording of Article 3(a) of the Convention, which only protects a jurisdiction clause that designates the chosen court "to the exclusion of the jurisdiction of any other courts". Clause 13(b) of the 1992 ISDA Master Agreement does not, on its face, do that - it makes English jurisdiction exclusive as against Contracting States, but expressly leaves the parties free to bring proceedings in courts outside the Contracting States. Read strictly, that opens the door to an argument that the clause falls outside Article 3(a) altogether. The counter argument is that the Convention only ever governs the relationship between courts of Contracting States, so when Article 3(a) refers to "any other courts", it must mean any other courts of Contracting States. On that reading, clause 13(b) does qualify, because it is exclusive as between Contracting State courts, which is the only relationship the Convention is in a position to regulate.
The third question is whether the jurisdiction clause in the 2002 ISDA Master Agreement is still exclusive as against Italy. Torino does not answer it, because it concerned the 1992 form.
The 2002 clause works differently from its 1992 predecessor. It makes English jurisdiction exclusive only where the foreign court is bound to apply Article 17 of the 1968 Brussels Convention or the 1988 Lugano Convention. The User’s Guide explains the rationale: those Conventions did not explicitly acknowledge the validity of non-exclusive jurisdiction agreements, so the drafters provided for exclusive English jurisdiction in cases involving a “Convention Court” to ensure the clause’s validity. Both Conventions have, however, long since been superseded.
The pre-Brexit case of Swissmarine Corporation Ltd v O.W. Supply & Trading A/S [2015] EWHC 1571 (Comm) considered the mechanism. Andrew Smith J rejected arguments that the reference to the Brussels Convention could be read as a reference to the Brussels Regulation. He held that neither the English nor the Danish courts qualified as Convention Courts, with the result that the clause operated non-exclusively.
In contrast, the 1992 ISDA Master Agreement contains a dynamic reference to “Contracting States” as defined by s.1(3) of the Civil Jurisdiction and Judgments Act 1982 “for the time being in force”. That updating mechanism allowed Torino to hold that Italy still qualifies as a Contracting State by virtue of the 2005 Hague Convention. The 2002 clause contains no equivalent. The result is that the two versions of the ISDA Master Agreement may now produce very different jurisdictional outcomes: the 1992 clause remains exclusive as against Contracting States, while the 2002 clause appears to operate non-exclusively in most situations. The English court is yet to confront this potential inconsistency.
The decision in Torino demonstrates the English court’s continued willingness to uphold standardised ISDA documentation, but the road is not yet fully travelled. There remain questions as to whether the 2005 Hague Convention will apply to ISDA disputes, whether the 1992 clause qualifies as an "exclusive choice of court agreement" that the Convention will protect and how the 2002 form’s outdated “Convention Court” mechanism will be applied by the courts. At least until those questions are resolved, ISDA’s 2018 Choice of Court and Governing Law Guide offers a potential solution for new transactions.
1 There is also a local currency-single jurisdiction version of the 1992 Master Agreement used largely for domestic American transactions
2 And the Brussels Regulation itself has since been superseded by Brussels Recast
3 The effective date of that accession is itself contested: the UK regards the Convention as having applied continuously since 1 October 2015 (when it was first bound through its EU membership), while the EU treats it as applying to the UK only from 1 January 2021. Torino sidesteps that debate by holding that the court looks at the position at the time of the dispute.
