Banca Intesa Sanpaolo Spa & Anor v Comune Di Venezia [2023] EWCA Civ 1482 (13 December 2023)

Banca Intesa Sanpaolo Spa & Anor v Comune Di Venezia [2023] EWCA Civ 1482 (13 December 2023)

The Court held that the IRS transactions were void because, under Italian law as interpreted in the Cattolica decision, Venice lacked capacity to enter into speculative derivative transactions and those involving recourse to indebtedness not for investment expenditure. This lack of capacity was classified under English law as a capacity restriction, rendering the contracts void. The restitution claim by Venice was governed by English law, and the Banks were in principle entitled to raise a change of position defence. Venice's restitution claim was not time-barred because it could not with reasonable diligence have discovered its mistake before the Cattolica decision.

Citation
[2023] EWCA Civ 1482
Parties
Appellant/claimant: Banca Intesa Sanpaolo SpA; Appellant/claimant: Dexia Credit Local SA; Respondent/defendant: Comune di Venezia
Jurisdiction
England and Wales
Judgment Date
13 December 2023
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court (commercial Court)
Outcome
Appeals dismissed (main grounds); cross-appeal dismissed; judge's orders largely upheld
Legal Topics
Interest Rate Swaps, Capacity of Public Authorities, Restitution/unjust Enrichment, Limitation Periods, Change of Position Defence, Foreign Law in English Courts
Banking and Finance Law Conflict of Laws Public Law Contract Law Interest Rate Swaps Capacity of Public Authorities Restitution/unjust Enrichment Limitation Periods +2 more

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Parties

Banca Intesa Sanpaolo SpA

Appellant/claimant

Dexia Credit Local SA

Appellant/claimant

Comune di Venezia

Respondent/defendant

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court (commercial Court)

Legal Issues

  1. 1 Whether the IRS transactions were void for lack of capacity under Italian law as applied by English law
  2. 2 Whether the transactions were speculative or involved recourse to indebtedness contrary to Article 119(6) of the Italian Constitution
  3. 3 Whether Venice's restitution claim was time-barred under the Limitation Act 1980

Ratio Decidendi

The Court held that the IRS transactions were void because, under Italian law as interpreted in the Cattolica decision, Venice lacked capacity to enter into speculative derivative transactions and those involving recourse to indebtedness not for investment expenditure. This lack of capacity was classified under English law as a capacity restriction, rendering the contracts void. The restitution claim by Venice was governed by English law, and the Banks were in principle entitled to raise a change of position defence. Venice's restitution claim was not time-barred because it could not with reasonable diligence have discovered its mistake before the Cattolica decision.

Court Disposition

Appeals dismissed (main grounds); cross-appeal dismissed; judge's orders largely upheld

Orders

  • The IRS transactions are void for lack of capacity under Italian law as applied by English law.
  • Venice's restitution claim is governed by English law.