The critical point in Monday’s judgment in ING Bank N.V. & Anor v Banco Santander S.A.  EWHC 3561 (Comm), an application for lack of jurisdiction, is whether this is a case about claims which a syndicate of eight lenders, including ING, had against Marme Inversiones 2007 S.L.U (“Marme”) under a loan agreement and related swap agreements (together “the Marme Agreements”) which were entered into between the lenders and Marme in September 2008, or whether it is about the effect of the ongoing liquidation of Marme in Spain on those claims. The Defendant Applicant says the latter, the Claimant Respondents say the former.
Of note is that on 2 January 2020, Sorlinda, whose agreements are at issue, merged into Santander. As a consequence of the merger, Santander assumed all of Sorlinda’s rights and liabilities.
At 4 Cockerill J summarises ‘the field of battle’ (at 4) as follows:
Santander contends that the court should refuse to exercise jurisdiction or order a stay because:
i) The claim falls within the EU Insolvency Regulation on insolvency proceedings (the “Insolvency Regulation”) and is excluded from the scope of the recast Regulation (EU) No. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the “Brussels Regulation”) pursuant to Article 1(2)(b) of the Brussels Regulation.
ii) Even if the Claim does not fall within the exception under Article 1(2)(b), ING cannot rely upon Article 25 of the Brussels Regulation.
iii) As a matter of Spanish law, ING has not established that Sorlinda became liable to ING for Marme’s liabilities.
iv) There are in any event grounds for the Court to refuse to exercise its jurisdiction and/or to order a stay.
ING contends that:
i) The bankruptcy/winding up exclusion in Article 1(2)(b) of the Brussels Regulation does not apply. The Claim is between two solvent entities in relation to contractual payment obligations under the Marme Agreements, and has no effect on Marme or any of its other creditors. The Claim does not derive directly from Marme’s winding up nor is it closely connected with that winding up.
ii) The question of whether or not Santander is bound by the Marme Agreements is a question of English law having appropriate regard to the effect of the relevant “assumption” of Marme’s obligations by Sorlinda (now Santander) as a matter of Spanish law.
iii) There is (at least) a good arguable case that as a consequence of the “assumption” Santander has a direct liability to ING under the Marme Agreements which are subject to the exclusive jurisdiction of the English courts.
iv) There are no grounds for the Court to refuse to exercise its jurisdiction and/or to order a stay. (GAVC underlining)
She holds that the jurisdictional challenge succeeds on the A25 BIa point, and also on the Insolvency Regulation point. The other grounds (assumption in Spanish Law and case management stay) would have failed.
Arguments in essence concern Brussels Ia’s insolvency exception. Per CJEU Gourdain, an action is related to bankruptcy only if it derives directly from the bankruptcy and is closely linked to proceedings for realising the assets or judicial supervision. Valach and F-Tex is CJEU authority also discussed.
In general, it is the closeness of the link between a court action and the insolvency proceedings that is decisive for the purposes of deciding whether the insolvency exclusion is applicable (CJEU German Graphics). In the absence of substantive EU insolvency law, the CJEU does not push an autonomous interpretation of the concept and defers largely to national insolvency law.
Whether the action is within the scope of BIa therefore requires examination of the national laws at issue, and that is done at length (featuring ia prof Virgós, whose expert report clearly impressed Mrs Justice Cockerill).
Core of the decision on the insolvency exception, is at 197:
..the nature of the claim is one which is defined by something which took place in the liquidation, and the dispute effectively cannot be expressed without reference to the conduct of the liquidation. Although there is no challenge to the validity of the liquidator’s actions, the proceedings do necessarily require a consideration of the ambit of those powers and the ambit of actions done as part of those powers. The question of to what extent Sorlinda assumed the relevant liability can only be answered by looking at the deal which was struck in the context of the Liquidation Plan (governed by Spanish insolvency law) and the statutory insolvency framework.
The claim is not covered by BIa. English courts do not have jurisdiction over it.
Article 25 BIa is discussed first in fact, at 113 ff. However I would have thought (although Cockerill J suggest quite the reverse) that the A25 arguments must be obiter, with the insolvency exception findings logically coming first. This may be at issue when this judgment is appealed and /or referred to later.
On A25, ING must demonstrate a good arguable case either as to succession to choice of court, or as to specific consent. It was clear that the latter was not established hence discussion focused on novation /succession. Authority discussed was of course Refcomp, Coreck Maritime, Tilly Russ etc.
This section of the judgment does not have the same clarity as the discussion on insolvency. Much reference is made to the relevance of either Spanish or English law on the issue of privity of choice of court, however this seems to be mostly done with reference to those laws being potential lex contractus (of the underlying contract). Even if the issue is not completely dealt with autonomously by EU law (which is arguable; and would have ended reference to any national laws), discussion of national law arguably should be to lex fori prorogati per the new rule in Brussels Ia (even a putative lex fori prorogati). At any rate, no succession or novation is established.
Something to clear out in my head over the end of year break.
This was most probably my last posting for the year.
Merry Christmas, everyone, and Guten Rutsch. Be safe, and remember this nice thought.
European Private International Law, 3rd ed., 2021, Heading 188.8.131.52 (2.73 ff) and Heading 184.108.40.206 (2.355 ff).