High Court confirms exclusive jurisdiction of English courts under ISDA Master Agreement

In Dexia SA v Comune Di Torino [2025] EWHC 1903 (Comm), the High Court held that the ‘non-exclusive’ jurisdiction clause in the English law 1992 ISDA Master Agreement (the ISDA MA), properly interpreted, was exclusive against certain jurisdictions. On the facts, this meant that disputes concerning interest rate hedging swaps were subject to the exclusive jurisdiction of the English courts and proceedings brought by the defendant swap party in Italy were in breach of the ISDA MA’s jurisdiction clause.

In its judgment, the Court has provided clarity on the construction of the ISDA MA jurisdiction clause following Brexit and shown commitment to holding parties to their jurisdictional bargain, particularly in the sphere of international finance.

Background

Between 2001 and 2006, the claimant entered into various interest rate swap transactions with the defendant, an Italian municipal authority, which were designed to hedge the defendant’s interest rate exposure and reduce its indebtedness under bonds worth around €400 million. The swaps were entered into pursuant to the ISDA MA, which included an English governing law clause and jurisdiction clause in favour of the English courts.

The defendant began proceedings against the claimant in Italy, seeking damages for alleged breaches of pre-contractual and tortious duties concerning its entry into the swaps, a declaration that the swaps were void under Italian law, termination of the swaps and restitution of amounts paid under them.

The claimant challenged the Italian Court’s jurisdiction. It also brought a separate claim in the English courts for a declaration that the swaps were subject to the exclusive jurisdiction of the English courts and the Italian proceedings had been brought in breach of the ISDA MA’s jurisdiction clause (clause 13(b)).

Permission to proceed with summary judgment

The claimant asked the High Court to grant the declaration by way of summary judgment against the defendant. This required the Court’s permission as the defendant had not filed an acknowledgment of service or defence to the claim and so a claimant would typically seek judgment in default. The Court granted permission as the claimant had a “legitimate interest” in seeking summary judgment because summary judgment would be more readily enforceable in other jurisdictions than alternatives such as default judgment – this was important given the pending Italian proceedings.

The Court also had to satisfy itself that it was appropriate to proceed in the defendant’s absence, as the defendant had failed to participate in the English proceedings. The Court noted that it should proceed in the absence of a defendant with “great care” but held that this was a “clear case” in which it was appropriate to do so, finding that the defendant’s absence was “deliberate and voluntary”.

Proper construction of the jurisdiction clause

In deciding whether to grant a declaration that the swaps were subject to the exclusive jurisdiction of the English courts, the High Court had to determine the proper construction of the jurisdiction clause (clause 13(b)) of the ISDA MA. This provided as follows:

“Each party irrevocably submits to the jurisdiction of the English Courts, if this Agreement is expressed to be governed by English law… Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982…).”

In the defendant’s absence, the claimant drew the Court’s attention to arguments the defendant might have raised, based on what the defendant had argued in the Italian proceedings. This included the argument that clause 13(b) of the ISDA MA does not confer exclusive jurisdiction on the English courts because, at least since Brexit, Italy is not a “Contracting State” for the purposes of that clause.

Decision

The Court found that the swaps were subject to the exclusive jurisdiction of the English courts and granted the claimant summary judgment of the declaration it sought, rejecting all of the defendant’s anticipated arguments.

In particular, the Court held that clause 13(b) conferred exclusive jurisdiction on the English courts, as against Italy.

Where the ISDA MA is expressed to be governed by English law, clause 13(b) generally confers non-exclusive jurisdiction on the English courts. However, where a matter involves the courts of a “Contracting State”, it becomes an exclusive English jurisdiction clause.

“Contracting States” (as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982) is a fluid definition that has changed over time. The Court held that the relevant definition of “Contracting States” was the one operative at the time of the litigation, which meant a state bound by the Hague Convention on Choice of Court Agreements 2005 (Hague 2005). Italy was a state bound by Hague 2005 at the time of the litigation, so the jurisdiction of the English courts to hear disputes in connection with the ISDA MA was exclusive as against Italy.

The Court dismissed any suggestion that the relevant convention to which a Contracting State was party also needed to apply to the jurisdiction clause of the agreement in question in order to confer exclusive jurisdiction on the English courts. The Court held that there was no such requirement – the test in clause 13(b) was simply an assessment of whether a relevant state was or was not bound by the relevant convention in force. If it was, the jurisdiction in favour of the English courts became exclusive.

The Court also observed that there was no prejudice to the defendant from the various iterations of the definition of “Contracting States” as Italy fell within the definition at all times since the defendant entered into the swaps.

Key takeaways

The High Court has provided welcome clarity on the proper interpretation of clause 13(b) of the ISDA MA following Brexit. The definition of "Contracting State" has changed over time, including as a result of Brexit, and it remains fluid – it now also includes states bound by the Hague Judgments Convention 2019 which came into force in the UK on 1 July 2025.

This case also demonstrates the English courts’ commitment to upholding a contractual choice of English jurisdiction and a willingness to provide practical assistance in support of this, particularly in the context of international financial contracts such as the ISDA MA where market certainty is important.

With thanks to Izzy James for her assistance in preparing this post.