Following a number of contradictory Italian local court decisions, the Italian Supreme Court has recently ruled on jurisdiction and forum-shopping issues in two cases involving ISDA Master Agreements entered into by two Italian municipalities (Milan and Venice).
The municipalities claimed damages for tortious liability arising from conduct before the conclusion of the contract (i.e. in the pre-contractual phase). Then both municipalities filed a concurrent claim for damages for contractual liability for breach of collateral consultancy agreements. The defendants disputed the local courts’ jurisdiction on the basis of Article 13 of the ISDA Master Agreement, which provided that English courts have jurisdiction for disputes “relating to this Agreement”.
The Supreme Court found that the Italian courts had jurisdiction in both cases. The first case, involving the Municipality of Milan, was decided by the Supreme Court on 27 February 2012. The Supreme Court held that the jurisdiction clause did not extend to tort claims. First, it decided that in a complex dispute where subordinate claims are also filed, jurisdiction is determined by the main claim. Italian courts had jurisdiction over the main tort claim under the Brussels Regulation, subject to the effect of the jurisdiction clause in the ISDA Master Agreement.
The Supreme Court then set out principles of interpretation of this jurisdiction clause. It clarified, in line with European case law, that jurisdiction clauses must be strictly interpreted and assessed separately from the agreement in which they are contained and, most importantly, that the national judge, before which their interpretation is sought, decides such interpretation. Hence, based on Italian law principles of contractual interpretation, the Court held that the wording “relating to this Agreement” in the jurisdiction clause under Article 13 of the ISDA Master Agreement did not extend the jurisdiction of English courts to all disputes, whether contractual or tortious, connected to the same derivative contractual framework.
In conclusion, the Italian Supreme Court ruled that in the event of a jurisdiction clause as the one contained in the ISDA Master Agreement, referring to disputes “relating to this Agreement”, English jurisdiction does not extend also to tort claims.
Two years later, in a similar case involving the Municipality of Venice, the Italian Supreme Court reconfirmed the first ruling in full based on the same reasoning.