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Journal of International Banking & Financial Law/2008 Volume 23/Issue 9, October/Articles/Jurisdiction
Clause Clashes in Suite of Contracts - (2008) 9 JIBFL 475
Journal of International Banking and Financial Law
(2008) 9 JIBFL 475
1 October 2008
Jurisdiction Clause Clashes in Suite of Contracts
UBS AG and Another v HSH Nordbank AG [2008] All ER (D) 70 (Jul) (Queen's Bench Division, Commercial Court) (Walker J) (4 July 2008)
Jonathan Lawrence
K&L Gates
jonathan.lawrence@klgates.com
www.klgates.com
© Reed Elsevier (UK) Ltd 2008
Which court could try a claim which was subject to a jurisdiction clause dispute.
FACTS
UBS AG and a US subsidiary of UBS were the claimants and HSH Nordbank AG (at the time of the transaction being its predecessor LB Kiel) was the defendant. The claimants and the defendant entered into a transaction in March 2002. A company set up by the claimants (the 'Company') issued notes (the 'Notes'). The
Notes were issued to and purchased by UBS so that UBS could sell them to the defendant. The Notes were
governed by New York law and contained a New York jurisdiction clause. Contemporaneously, the claimants
and the Company entered into a credit swap agreement which was governed by English law and contained a
jurisdiction clause in favour of English courts. Through the credit swap, the claimants had the benefit of credit
protection from the Company by way of payments. However, there were defaults on assets in the reference
pool. A dispute arose between the claimants and the defendant.
The claimants commenced proceedings in the English courts against the defendant seeking negative declaratory relief. On the same day, the defendant began proceedings in New York applying for an order that
the English courts had no jurisdiction to try the claim which the claimants sought to make.
CONCLUSION
The English jurisdiction clauses in the relevant documents were insufficiently wide to cover the dispute set
out in the New York complaint. All matters relating to the Notes were subject to the laws of New York. UBS
did not show a 'good arguable case' that there was a dispute which fell within the contractual scope of the
English jurisdiction clauses, ie UBS did not have a much better argument on the material available.
The contracts in which the English jurisdiction clauses were found did not stand on their own. The parties
had entered into different agreements for different aspects of an overall relationship, with different terms as
to jurisdiction. They had done that despite the fact that many different aspects of the various contracts were
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intertwined and interwoven. Therefore, the parties had made agreements which were markedly different from
the normal expectation described in authority. The relevant background knowledge included knowledge of
other contracts forming part of the transaction. When considering the jurisdiction clauses, a person having
that background knowledge would at once see that there was scope for the clauses to clash. The conclusion
was that each such clause focused upon matters directly relating to the contract in which it was found. The
question in each case was to which contract the dispute in question was properly allocated; and the court
applies whatever jurisdiction provisions, if any, that contract may contain.