Deutsche Bank AG London v Comune di Busto Arsizio (Rev1) [2021] EWHC 2706 (Comm) (12 October 2021)

Deutsche Bank AG London v Comune di Busto Arsizio (Rev1) [2021] EWHC 2706 (Comm) (12 October 2021)

The Court held that, applying Italian law as interpreted in the Cattolica decision, Busto Arsizio lacked capacity to enter into the swap transactions without City Council approval, which was not obtained. The swaps are therefore void. However, restitution is available to Busto Arsizio for sums paid, but subject to English law defences of limitation and change of position. Deutsche Bank's fallback claim under Article 1338 of the Italian Civil Code fails as Busto could not have known of the nullity and the Bank was not without fault.

Citation
[2021] EWHC 2706 (Comm)
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 / Judgment After Trial
Outcome
Swaps declared void for lack of capacity; restitution ordered subject to English law defences; Deutsche Bank's fallback claim dismissed.
Legal Topics
Interest Rate Swaps, Local Authority Capacity, Restitution, Ultra Vires, Foreign Law Application
Banking and Finance Public Law Conflict of Laws Interest Rate Swaps Local Authority Capacity Restitution Ultra Vires Foreign Law Application

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 3 Authorities cited 12 Party arguments 2 Amounts and remedies 11
Sign in to unlock

Parties

Deutsche Bank AG London

Claimant

Comune di Busto Arsizio

Defendant

Procedural Posture

Commercial Court Financial List / Judgment After Trial

Legal Issues

  1. 1 Whether Busto Arsizio had capacity under Italian law to enter into the swap transactions with Deutsche Bank
  2. 2 Whether the swap transactions are void for lack of capacity or lack of required approvals under Italian law
  3. 3 Whether Busto is entitled to restitution of sums paid if the swaps are void

Ratio Decidendi

The Court held that, applying Italian law as interpreted in the Cattolica decision, Busto Arsizio lacked capacity to enter into the swap transactions without City Council approval, which was not obtained. The swaps are therefore void. However, restitution is available to Busto Arsizio for sums paid, but subject to English law defences of limitation and change of position. Deutsche Bank's fallback claim under Article 1338 of the Italian Civil Code fails as Busto could not have known of the nullity and the Bank was not without fault.

Court Disposition

Swaps declared void for lack of capacity; restitution ordered subject to English law defences; Deutsche Bank's fallback claim dismissed.

Orders

  • Declaration that the swap transactions are void and unenforceable
  • Comune di Busto Arsizio entitled to restitution of net sums paid, subject to English law defences