Dexia Crediop S.P.A. v Comune Di Prato [2015] EWHC 1746 (Comm) (25 June 2015)

Dexia Crediop S.P.A. v Comune Di Prato [2015] EWHC 1746 (Comm) (25 June 2015)

The swaps did not contravene Italian local government finance law and Prato had capacity to contract. However, under English conflict of law principles, mandatory rules of Italian financial services law applied. Dexia failed to state Prato's right of withdrawal in the contract as required by Italian law, rendering swap 6 null and void, with only Prato entitled to enforce this nullity. Prato exercised this right in its defence, so Dexia's main claim failed.

Citation
[2015] EWHC 1746 (Comm)
Parties
Claimant: Dexia Crediop S.p.A.; Defendant: Comune di Prato
Jurisdiction
England and Wales
Judgment Date
25 June 2015
Procedural Posture
Commercial Claim (financial Instruments, Swaps) / High Court (commercial Court) Final Judgment on Main Claim and Defences
Outcome
Dexia's main claim dismissed; swap 6 declared null and void under mandatory Italian law, with only Prato entitled to enforce the nullity. Further directions required on counterclaims and alternative claims.
Legal Topics
Interest Rate Swaps, Derivatives, Capacity of Local Authorities, Mandatory Rules (rome Convention), Illegality, Misrepresentation, Restitution, Financial Services Regulation
Banking and Finance Law Conflict of Laws Local Government Law Interest Rate Swaps Derivatives Capacity of Local Authorities Mandatory Rules (rome Convention) Illegality +3 more

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Parties

Dexia Crediop S.p.A.

Claimant

Comune di Prato

Defendant

Procedural Posture

Commercial Claim (financial Instruments, Swaps) / High Court (commercial Court) Final Judgment on Main Claim and Defences

Legal Issues

  1. 1 Whether the swaps contravened Italian local government finance law and thus deprived Prato of capacity to contract
  2. 2 Whether mandatory rules of Italian financial services law applied and rendered the swaps voidable or void
  3. 3 Whether Dexia's failure to state the right of withdrawal invalidated swap 6

Ratio Decidendi

The swaps did not contravene Italian local government finance law and Prato had capacity to contract. However, under English conflict of law principles, mandatory rules of Italian financial services law applied. Dexia failed to state Prato's right of withdrawal in the contract as required by Italian law, rendering swap 6 null and void, with only Prato entitled to enforce this nullity. Prato exercised this right in its defence, so Dexia's main claim failed.

Court Disposition

Dexia's main claim dismissed; swap 6 declared null and void under mandatory Italian law, with only Prato entitled to enforce the nullity. Further directions required on counterclaims and alternative claims.

Orders

  • Dexia's claim for payment under swap 6 is dismissed.
  • Declaration that swap 6 is null and void under Italian mandatory rules, with only Prato entitled to enforce this.