Exclusive jurisdiction clauses, contractual and insolvency proceedings

Published on
2 min read

The claimant and a third party (“M”) entered into a loan agreement and swap agreement (the “agreements”). M went into liquidation and the Spanish Insolvency Court approved a bid from a company (“S”), assuming the assets and liabilities of M. S later merged into the defendant.

The claimant argued that the claim was for payment of outstanding amounts due under the agreements (governed by English law with English exclusive jurisdiction clauses) and as the defendant assumed M’s obligations, it was directly liable under the agreements. The defendant contended that this case was about the effect of the ongoing liquidation of M in Spain and that Article 25 of the Brussels Regulation could not be relied upon because it was not party to the agreements and not bound by the exclusive jurisdiction clauses.

Due to the governing law, the court found that English law was the relevant law for determining whether the defendant was bound by succession. The court found there was no novation or succession of the agreements and so the defendant was not bound by the exclusive jurisdiction clauses.

The court then considered the Insolvency Regulation/Brussels Regulation point, stating that for proceedings to fall within the insolvency exclusion of the Brussels Regulation, they must derive directly from and be closely connected with the insolvency proceedings. This test was satisfied, as the claim was not purely contractual just because the sum claimed was an entitlement to interest. Instead, the issue was whether the claim for interest was validly passed to the defendant. This issue only arose because of the insolvency process, so it was impossible to separate the case from the liquidation.

ING BANK N.V. and ING BANK N.V SPANISH BRANCH v. BANCO SANTANDER S.A. [2020] EWHC 3561 (Comm)

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