Deutsche Bank AG London v Comune diBusto Arsizio

Deutsche Bank AG London v Comune diBusto Arsizio

Italian law does not per se prohibit local authorities from entering into derivative contracts; Cattolica restricts capacity to hedging swaps, not speculative ones. The swaps in question were hedging, not speculative, and did not constitute indebtedness or require City Council approval under Article 42(2)(i) TUEL. Even if approval were required, it was given by City Council Resolution 32/2007. The swaps complied with statutory requirements. Material validity is governed by English law, under which the contracts are valid and binding. Restitution claim fails as DB's defences would apply under English law. Contractual estoppel does not override ultra vires, but ratification would apply...

Parties
Claimant: Deutsche Bank AG London; Defendant: Comune di Busto Arsizio
Jurisdiction
England and Wales
Judgment Date
12 October 2021
Procedural Posture
Commercial Court Financial List / Final Judgment After Trial
Outcome
Claim allowed; swaps valid and binding; restitution counterclaim dismissed
Legal Topics
Capacity of Public Bodies, Interest Rate Swaps, Ultra Vires, Restitution, Ratification, Speculation Vs Hedging, Authority of Agents, Mandatory Statutory Requirements
Contract Law Conflict of Laws Administrative Law Banking and Finance Capacity of Public Bodies Interest Rate Swaps Ultra Vires Restitution +4 more

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Parties

Deutsche Bank AG London

Claimant

Comune di Busto Arsizio

Defendant

Procedural Posture

Commercial Court Financial List / Final Judgment After Trial

Legal Issues

  1. 1 Did Busto have capacity under Italian law to enter into the swaps?
  2. 2 Did the swaps require City Council approval under Article 42(2)(i) TUEL?
  3. 3 Were the swaps speculative or hedging under Italian law?

Ratio Decidendi

Italian law does not per se prohibit local authorities from entering into derivative contracts; Cattolica restricts capacity to hedging swaps, not speculative ones. The swaps in question were hedging, not speculative, and did not constitute indebtedness or require City Council approval under Article 42(2)(i) TUEL. Even if approval were required, it was given by City Council Resolution 32/2007. The swaps complied with statutory requirements. Material validity is governed by English law, under which the contracts are valid and binding. Restitution claim fails as DB's defences would apply under English law. Contractual estoppel does not override ultra vires, but ratification would apply...

Court Disposition

Claim allowed; swaps valid and binding; restitution counterclaim dismissed

Orders

  • Declaration that Busto is bound by the terms of the swap transactions
  • Restitution counterclaim dismissed