EUPillar UBS AG, London Branch & Anor v Kommunale Wasserwecke Leipzig GmbH [2010] EWHC 2566 (Comm)

Summary

The dispute was in respect of a Swap Agreement, and a Portfolio Management Agreement. Both agreements contained English law and jurisdiction clauses. The parties to the agreements were companies from the UBS group, on one side, and Kommunale Wasserwerke Leipzig (KWL), on the other side. The English proceedings were commenced on 18th January 2010. The claimants, English based members of the UBS group, sought declarations concerning the validity and enforceability of the agreements. In the course of the proceedings, UBS AG (London branch) sought to amend the claim form and add a monetary claim for nearly £100 million. On 26th February 2010, KWL commenced proceedings in Germany arguing that the agreements were null. In England, KWL challenged the jurisdiction of the English courts on two alternative grounds. First, it was argued that the dispute is within the scope of Article 22(2) of Brussels I. Secondly, KWL argued that the German court was first seised. The defendant even proposed a text for a preliminary reference to the CJEU. The challenge on the ground of Article 22(2) was dismissed by the English High Court. It was also stated that the argument that the German court was first seised was unsustainable. It was further concluded that there was no need for a reference to be made to the CJEU. Mrs Justice Gloster held: “3 Once again, the subject matter of the dispute is credit default swap arrangements and the first skirmish is over jurisdiction. That skirmish has ranged largely over the same battlefields as the recent decisions of Berliner Verkehrsbetriebe (BVG) Anstalt Des Offentlichen Rechts v JP Morgan Chase Bank NA and Depfa Bank plc v Provincia di Pisa. 4 And, once again, the claimants contend that jurisdiction is established under Article 23 of the Regulation on the grounds that the relevant swap contracts contain an English court exclusive jurisdiction clause, and the defendant challenges jurisdiction on the basis that Article 22.2 trumps Article 23, because the decisions by its directors to enter into the swap arrangements were allegedly ultra vires or otherwise invalid. […] 52 I conclude, applying the approach articulated by Aikens LJ in BVG, that the English Proceedings are not likely to be ‘principally concerned’ with the ‘validity of the decisions of’ KWL, such as to require a declaration pursuant to Article 25 of the Regulation that the English court has no jurisdiction in relation to UBS’ claims, on the basis that the German court has exclusive jurisdiction. Based on the material which I have seen and have referred to above, I characterise the English proceedings as being ‘principally concerned with’ the enforceability of the Balaba CDO at the suit of UBS AG, UBS AG’s entitlement (if any) to receive payment thereunder, and the conduct of UBS AM as portfolio manager under the PMAs. As part of those overall issues, the court will have to consider the various defences likely to be put forward by KWL, of which an important one, which could perhaps be decisive, will no doubt be the ultra vires or capacity defence based on Professor Eidenmüller’s three Concepts. But the reality is that the ultra vires/capacity issues are not going to be the principal focus of the English Proceedings as a whole.” [3, 4 and 52]