Banca Intesa Sanpaolo SpA & Anor v Comune Di Venezia

Banca Intesa Sanpaolo SpA & Anor v Comune Di Venezia

The Court of Appeal held that the transactions were not speculative under Italian law, as the negative MTM rolled over from the Bear Stearns swap did not create a new speculative risk but reflected an existing hedging exposure. Both limbs of the CONSOB Determination were satisfied, so the transactions were valid hedging instruments. The payments to Bear Stearns were not 'upfront' payments to Venice. Accordingly, Venice had capacity to enter the transactions, which were valid and binding. The judge's errors included mischaracterising the economic effect of the transactions and relying on lower court and English cases rather than the Italian Supreme Court's approach.

Parties
Appellant/claimant: Banca Intesa Sanpaolo SPA; Appellant/claimant: Dexia Credit Local SA; Respondent/defendant: Comune di Venezia
Jurisdiction
England and Wales
Judgment Date
11 October 2024
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court
Outcome
Appeal allowed; High Court decision set aside; transactions declared valid and binding on Venice.
Legal Topics
Interest Rate Swaps, Capacity of Public Authorities, Restitution/unjust Enrichment, Limitation Periods, Ultra Vires Doctrine
Banking and Finance Law Conflict of Laws Contract Law Public Law Interest Rate Swaps Capacity of Public Authorities Restitution/unjust Enrichment Limitation Periods +1 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

Legal Issues

  1. 1 Whether the interest rate swap transactions entered into by Comune di Venezia were void for lack of capacity under Italian law as interpreted by the Italian Supreme Court in Cattolica;
  2. 2 Whether the transactions were speculative or involved recourse to indebtedness contrary to Article 119(6) of the Italian Constitution;
  3. 3 Whether restitutionary claims by Venice were time-barred under the Limitation Act 1980;

Ratio Decidendi

The Court of Appeal held that the transactions were not speculative under Italian law, as the negative MTM rolled over from the Bear Stearns swap did not create a new speculative risk but reflected an existing hedging exposure. Both limbs of the CONSOB Determination were satisfied, so the transactions were valid hedging instruments. The payments to Bear Stearns were not 'upfront' payments to Venice. Accordingly, Venice had capacity to enter the transactions, which were valid and binding. The judge's errors included mischaracterising the economic effect of the transactions and relying on lower court and English cases rather than the Italian Supreme Court's approach.

Court Disposition

Appeal allowed; High Court decision set aside; transactions declared valid and binding on Venice.

Orders

  • Declaration that Venice had capacity to enter the transactions and they are valid and binding.
  • High Court order declaring transactions void set aside.