England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		14/08/2009

Mr Justice Walker :

Introduction

1. A claim ("the London claim") has been brought in this court by Deutsche Bank AG ("DB"). DB is a global investment bank which is incorporated under the laws of Germany. It has its headquarters in Frankfurt and has substantial offices throughout the world including New York, London and Geneva.
2. The defendant in the London claim is Sebastian Holdings Inc ("SHI"). SHI is a company incorporated under the laws of the Turks and Caicos Islands. It was formed for the purpose of holding and dealing in investments including securities and foreign currencies. The sole shareholder and director of SHI is Mr. Alexander Vik.
3. For some years SHI was a customer of DB. Disputes arose between them. On 24 November 2008 SHI began proceedings ("the New York claim") in the Supreme Court of the State of New York, County of New York City ("the New York court") against DB. In pursuit of the New York claim SHI on 20 January 2009 served its complaint ("the New York complaint") on DB.
4. On 21 January 2009 DB issued its claim form in the London claim. The claim form and particulars of claim ("the London particulars") were served on Clifford Chance in London on behalf of SHI. SHI filed an acknowledgement of service which indicated an intention to contest the jurisdiction of the court.
5. On 23 February 2009 SHI filed a motion ("the Motion to Restrain") in the New York court seeking an order restraining DB from taking further steps in the London claim pending the determination of the New York claim, and also sought a temporary restraining order until the Motion to Restrain could be decided. The New York court did not grant SHI a temporary restraining order. On 24 February 2009 DB filed a motion ("the Motion to Dismiss") with the New York court seeking: (1) dismissal of the New York complaint or a stay of the New York claim on the grounds of forum non conveniens, the existence of English proceedings between the parties in the form of the London claim, and the existence of English jurisdiction clauses; or (2) dismissal of the New York complaint on the ground that SHI was not authorised to do business in New York; or (3) dismissal of SHI's tort and restitution claims on the grounds that those claims failed to state a cause of action. The New York court has heard argument on the parties' respective motions and its decision is awaited.
6. SHI has in the meantime applied in the London claim for an order declaring that this court has no jurisdiction to try the claim which DB seeks to make in these proceedings. The parties are agreed that this court should determine the procedural questions which arise in the London claim without awaiting the decision of the New York court on the Motion to Restrain and the Motion to Dismiss. For that reason I have heard argument and proceed to give judgment now, without intending any discourtesy to the New York court.
7. SHI has an alternative application. If this court has jurisdiction, SHI asks the court to decline to exercise jurisdiction on the grounds that the courts of New York are the natural and proper forum for the resolution of the dispute. As a matter of case management I ruled that argument on this alternative application should not proceed until I had given my decision on the question whether this court did indeed have jurisdiction.

Overview of dealings between the parties

8. Between May 2006 and January 2008 inclusive DB and SHI entered into a number of agreements ("the equities agreements") concerning equities trading carried out by SHI. DB held and operated an account ("the equities account") on behalf of SHI in London to facilitate this trading ("the equities trading") and to provide prime brokerage services to SHI.
9. During the same period DB and SHI also entered into a number of agreements ("the FX agreements") concerning foreign exchange, precious metals and options trading by SHI. SHI, through its agent who was based in Connecticut, entered into trades in DB's name with third parties. Each such trade was the subject of an offsetting contract between SHI and DB. The trades were processed by DB's FX Prime Brokerage operations group in New Jersey. The associated account into which debit or credit entries were made was held and operated by DB on behalf of SHI in London.
10. In October 2008 DB became concerned about losses on SHI's FX Trading. It made margin calls in mid-October. These were followed by various transfers and liquidations, leading (among other things) to demands by DB under the equities agreements and the FX agreements. The demands were not met. Legal proceedings ensued as described above.

History of events

11. In May 2006 DB and SHI entered into the first of the equities agreements. It was dated "as of May 8, 2006" and was based on a 1992 form prepared by the International Swap Dealers Association ("ISDA") for a Master Agreement and Schedule, including Credit Support Annex. I shall refer to it as "the Equities ISDA Master Agreement", or "EIMA" for short. It provided a contractual framework within which DB and SHI could enter into over the counter ("OTC") derivatives transactions with one another. OTC derivatives transactions are derivative contracts that are traded and privately negotiated between counterparties, rather than trading over an exchange or intermediary. As to service of process, section 13(c) stated that each party irrevocably appointed the process agent (if any) specified opposite its name in the Schedule to receive service of "Proceedings" - defined as "any suit, action or proceedings relating to this Agreement". Part 4(b) of the Schedule dealt with process agents. For SHI it stated, "To be notified in writing by [SHI]". As to governing law, Section 13 (a) of EIMA and Part 4 (h) of the Schedule to EIMA stated that EIMA was to be governed by English law. As to jurisdiction, Section 13 (b) stated:

With respect to any suit, action or proceedings relating to this Agreement ("Proceedings") each party irrevocably:

(i) submits to the jurisdiction of the English courts …; and

(ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party.

Nothing in this agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or re-enactment thereof for the time being in force) nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction.

12. The next agreements to be made were FX agreements. On 28 November 2006 SHI signed two documents which were also signed by DB. One was dated on its signature page "as of" the date on its first page, namely 3 November 2006. The other was dated "as of 22 November 2006."
13. The document dated as of 3 November 2006 was a prime brokerage agreement. I shall refer to it as "the FX prime brokerage agreement", or "FXPBA" for short. In it DB authorised SHI to act as its agent in executing certain foreign exchange transactions, precious metal transactions and currency options ("counterparty transactions") with listed counterparties on the terms set out in Annex B. By clause 1 SHI's authority was limited for each counterparty by a settlement limit and a maximum counterparty net open position. By clause 2 SHI agreed to monitor the net daily settlement amount and counterparty net open position for each counterparty, and it was stated that DB would not be responsible for counterparty transactions unless certain requirements were met. Also by clause 2 DB agreed to provide SHI with a summary of outstanding trades and net exposure with respect to each counterparty at specified intervals. Clause 4 provided that each counterparty transaction would give rise to an offsetting transaction in one or other of two alternative ways. In fact only one of the alternatives was used: an offsetting agreement between DB and SHI which was described as an "agent transaction." Each agent transaction was to be subject to and governed by what was described as the "Agent Master Agreement", namely "the applicable ISDA master agreement between [DB] and [SHI], including the credit support annex." SHI was required to post collateral with respect to its obligations under the Agent Master Agreement in accordance with the terms and provisions of the credit support annex. Clause 13 provided that FXPBA was to be governed by the law of the state of New York and subject to the non-exclusive jurisdiction of the courts of the state of New York and the United States District Court located in Manhattan, New York.
14. The document dated as of 22 November 2006 was the "Agent Master Agreement." I shall refer to it as "AMA" for short. Like EIMA it was based on the ISDA 1992 form. It provided a contractual framework for the agent transactions. As to service of process, governing law and jurisdiction, Sections 13 (a) to (c) of AMA and Part 4 (h) of the Schedule to AMA were in identical terms to those of EIMA (see above). Part 4(c) of the Schedule stated that SHI appointed as its process agent Clifford Chance in London.
15. Also signed on 28 November 2006 was a Pledge and Pledgeholder Agreement, which I shall refer to as the "Swiss Pledge". It was entered into between SHI as Pledgor, DB as Pledgee and Deutsche Bank (Suisse) SA as Pledgeholder. Assets deposited or relating to a specified account of SHI with the Pledgeholder were pledged to serve as collateral to DB for all claims that DB had against SHI. By clause 21 the Swiss Pledge was governed by Swiss law. Clause 21 added:

Place of performance, place of collection for Pledgors residing abroad and sole place of jurisdiction for all proceedings shall in each case be the place where the respective DBS office is located. For this purpose the Pledgor elects the respective office of DBS as the legal and special domicile. However, the Pledgee shall also have the right to bring an action against the Pledgor before the competent court at its place of residence or before any other competent court.

16. A written authority dated 28 November 2006 was provided by SHI to Mr Klaus Said to trade on behalf of SHI for the purpose of executing foreign exchange transactions and currency options with DB.
17. SHI asserts that the grant of authority to Mr Said, the Swiss Pledge, AMA and FXPBA were all associated with a further agreement, the "Collateral Limitation Agreement." SHI's case is that this agreement, which was not in writing, limited SHI's maximum exposure in connection with the FX trading to be conducted by Mr Said to $35 million.
18. Clause 2 of FXPBA stated that the dealing arrangement with respect to each counterparty was to be set out in a counterparty agreement, substantially in the form of a template which DB would provide on request. DB has recently provided to SHI a template dated 9 April 2007. Clause 7 of the template states that the agreement is to be governed by and construed in accordance with the law of the State of New York without reference to choice of law doctrine. It adds:

Any action or proceeding relating in any way to this agreement may be brought and enforced in the courts of the State of New York and the United States District Court, in each case located in the Borough of Manhattan, New York.

19. On 30 January 2008 four new equities agreements were made. They were associated with a broadening of the type of transaction covered by EIMA so as to go beyond OTC transactions and to include trading over an exchange or through an intermediary.
20. Prime brokerage services for this purpose were the subject of an Equities Prime Brokerage Agreement ("EPBA"). This included the following:

30. AGENT FOR SERVICE OF PROCESS

[SHI] appoints the following as its agent for service of process in England and Wales:

Clifford Chance LLP … London …

31. GOVERNING LAW

This Agreement and each Transaction effected pursuant to this Agreement are governed by and shall be construed in accordance with English law and each party hereby irrevocably submits to the exclusive jurisdiction of the English courts.

21. Under a Listed F & O Agreement ("LFOA") DB (described as "we") agreed to provide SHI (described as "you") services in relation to futures, options and other derivative transactions made pursuant to the rules of an exchange. It included the following:

18. GOVERNING LAW AND JURISDICTION

18.1 Governing law: This Agreement (including its various schedules) and any Transactions entered into hereunder shall be governed by and construed in accordance with English Law except that a Transaction which is subject to the Rules of an Exchange shall be governed by the law applicable to it under those rules.

18.2 Jurisdiction: Each of the parties irrevocably

(a) agrees for our benefit that the courts of England shall have jurisdiction to settle any suit, action or other Proceedings relating to this Agreement and irrevocably submits to the jurisdiction of such courts (provided that this shall not prevent us from bringing an action in the courts of any other jurisdiction); and

(b) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court and agrees not to claim that such Proceedings have been brought in an inconvenient forum or that such court does not have jurisdiction over it.

18.3 Waiver of immunity and consent to enforcement: ...

18.4 Service of process: If you are situated outside England and Wales, you appoint the following as your agent for service of process in England and Wales:

Clifford Chance LLP … London …

This does not affect our right to serve process in another manner permitted by law.

22. An Overseas Securities Lender's Agreement between SHI and DB described the terms and conditions upon which the parties would lend and borrow securities to each other. It included the following:

23. ARBITRATION AND JURISDICTION

(A) All claims, disputes and matters of conflict between the Parties arising hereunder shall be referred to or submitted for arbitration in London in accordance with English Law before a sole arbitrator to be agreed between the Parties or in default of agreement by an arbitrator to be nominated by the Chairman of the Stock Exchange on the application of either Party, and this Agreement shall be deemed for this purpose to be a submission to arbitration within the Arbitration Acts 1950 and 1979, or any statutory modification or re-enactment thereof for the time being in force.

(B) This Clause shall take effect notwithstanding the frustration or other termination of this Agreement.

(C) No action shall be brought upon any issue between the Parties under or in connection with this Agreement until the same has been submitted to arbitration pursuant hereto and an award made.

…

26. GOVERNING LAW

This Agreement is governed by, and shall be construed in accordance with English Law.

23. The fourth agreement of 30 January 2008 was a Master Netting Agreement ("MNA"). It provided for the ability to terminate the EIMA, the EPBA, and the LFOA (described collectively as the Underlying Agreements) and determine net termination amounts payable. It included the following:

11. GOVERNING LAW

This Agreement and all matters arising from or connected with it are governed by English Law.

12. JURISDICTION

12.1 The courts of England have exclusive jurisdiction to settle any dispute arising from or connected with this Agreement (a "Dispute").

12.2 The parties agree that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that they will not argue to the contrary.

13. PROCESS AGENT

The Counterparty [i.e. SHI] agrees that the documents which start any proceedings relating to a Dispute ("Proceedings") and any other documents required to be served in relation to those Proceedings may be served on Clifford Chance, whose registered office is currently at 10 Upper Bank Street, London, E14 5JJ, on his behalf. These documents may, however, be served in any other manner allowed by law. This clause applies to Proceedings in England and to Proceedings elsewhere.

24. SHI asserts that throughout 2007 and 2008 Mr Said carried out trades each of which was approved by DB without any request for further collateral until October 2008. On 6 October 2008 DB informed Mr Said that it required additional collateral. SHI asserts that at that date DB's website inaccurately showed a net credit in favour of SHI on the FXPB account of US$27 million whereas the true position, unknown to SHI at that time, was that it had accumulated hundreds of millions of dollars of losses.
25. SHI asserts that between 14 and 21 October, relying on erroneous information provided by DB and under duress, it paid margin calls in respect of the FXPB account amounting to approximately US$436 million. SHI asserts that thereafter, without authorisation or justification, DB liquidated positions of SHI in other accounts and transferred assets in an amount as yet undetermined.
26. On 23 October 2008 DB made a demand for sums allegedly owing by SHI under the equities agreements. It also asserted that an event of default had occurred. On 24 October 2008 DB purported to terminate FXPBA with immediate effect. By letter dated 4 December 2008 DB demanded a sum of approximately $120 million from SHI in respect of FXPBA.
27. Also on 4 December 2008 DB sent a letter to SHI terminating the EPBA pursuant to clause 7 of that agreement. The termination was stated to take effect that day. The letter also gave notice that the same day was to constitute the master termination date under MNA, the early termination date under EIMA, and the liquidation date under LFOA.
28. On 20 January 2009 DB advised SHI by letter that the amount due under the terms of MNA was US$125,523,086. This sum has not been paid by SHI.
29. DB asserts that between 14 October and 31 October 2008 it and SHI agreed to close out all positions governed by the AMA, with assets subject to the Swiss Pledge and other funds to be held by DB against amounts owed by SHI to DB following the close out of those transactions.
30. The letter from DB to SHI dated 4 December 2008 referred to above gave notice of a deficit remaining after various transfers of assets. The amount of the deficit in relation to the FXPB account was US$120,650,166. This sum has not been paid by SHI.
31. The New York claim, which had been issued on 24 November 2008, was served on DB in New York of 5 December 2008. On 24 December 2008 DB called on SHI to serve its complaint.
32. On 20 January 2009. SHI served the New York complaint on DB. The following day DB issued the London claim. It and the London particulars were thereafter served on Clifford Chance in London.

English jurisdiction: the Issues

33. Neither DB nor SHI is domiciled in England. DB asserts that the equities agreements and AMA provide two bases entitling it to sue SHI here. Both bases rely on clauses in those agreements. The first basis relies on jurisdiction clauses. The second basis relies on service of process clauses. It is convenient to describe as Issue 1 the question whether the jurisdiction clauses enable DB to sue here, and as Issue 2 the question whether the service of process clauses have that effect.
34. Before turning to these issues I summarise the jurisdiction and service clauses in the Equities and FX agreements and give an overview of the New York complaint and the London particulars. I also give a short account of the hearing before me and the written submissions which followed it.

Summary of jurisdiction and service clauses

35. The relevant jurisdiction and service clauses were summarised in DB's skeleton argument. The summary is largely uncontroversial. I set it out below with the controversial passage omitted and various minor modifications:

Equities Agreements

(a) Each of the Equities Agreements contains a submission by the parties to the jurisdiction of the English Courts.

(b) MNA and EPBA each provide for the exclusive jurisdiction of the English Courts.

(c) EIMA and LFOA each provide for the non-exclusive jurisdiction of the English Courts.

(d) MNA, EIMA and LFOA each contain an express statement to the effect that the parties will not object to proceedings in the English courts on the basis that such court is an inconvenient forum.

(e) Each of the Equities Agreements is governed by English law.

(f) By clause 13(b) of EIMA, SHI agreed to appoint a process agent, to be notified by SHI, to accept service of "Proceedings" which is defined as "any suit, action or proceedings relating to this Agreement".

FX Agreements

(g) AMA is governed by English law and contains a submission by the parties to the non-exclusive jurisdiction of the English courts. It also contains an express statement to the effect that the parties will not object to proceedings in the English courts on the basis that such court is an inconvenient forum.

(h) FXPBA is governed by New York law and contains a submission by the parties to the non-exclusive jurisdiction of the courts of New York.

(i) By clause 13(b) of AMA, SHI appointed Clifford Chance in London as its agent for service of Proceedings which is again defined as "any suit, action or proceedings relating to this Agreement".

(j) The FX Pledge is governed by Swiss law, and states that DB would have the right to bring an action against SHI in "the competent court at its place of residence or before any other competent court".

36. The controversial assertion in DB's summary was an assertion that by clauses 30 of EPBA, clause 18.4 of LFOA and clause 13 of MNA, not only did SHI appoint Clifford Chance in London as its agent for service of process under those agreements, but it thereby also notified Clifford Chance as its agent for service under EIMA.

The New York complaint

37. The New York complaint was summarised in SHI's skeleton argument, which I adopt with slight modifications. Paragraphs 1 to 76 of the New York Complaint contain factual allegations with respect to the parties, their relationship, the agreements between the parties, including FXPBA, and the events leading up to the commencement of SHI's claim. For present purposes, those allegations can be summarised as follows:

(1) In November 2006, SHI entered into FXPBA in New York with DB for the sole purpose of facilitating FX trading conducted by Mr. Said from Connecticut with the support of no more than US$35 million from SHI's pledged account with DB's Geneva branch.

(2) SHI relied on DB's provision of prime brokerage services, including the daily or twice daily calculation and reporting of positions, exposure, valuations and collateral, in relation to the FX trading so that SHI could be kept informed of the FX trading performance and to monitor the risk to SHI.

(3) DB and SHI agreed that SHI's maximum exposure in connection with the FX trading to be conducted by Mr. Said was limited to US$35 million which SHI agreed to pledge as collateral for the FX trading in favour of DB from SHI's account with DB's Geneva branch ("Collateral Limitation Agreement"). The US$35 million collateral limit was supported by calculations carried out by DB based on a hypothetical portfolio of FX trades provided to DB by Mr Said and an agreement with SHI that the collateral required to support Mr. Said's trading would be calculated at 200% of "VaR" (value at risk).

(4) Throughout 2007 and 2008, Mr. Said carried out trades each of which was approved by DB without any request for further collateral until October 2008.

(5) On 6 October 2008, DB informed Mr. Said that it required SHI to provide collateral for the New York FX trading account to be calculated using "2.5X 10-day VaR + Liquidity add-on" (instead of the agreed 200% of VaR and in breach of the Collateral Limitation Agreement) and this would increase the collateral required by DB for then existing FX trades from US$21 million to US$40 million.

(6) As at 6 October 2008, DB's website stated that SHI's net position in the New York FX PB account was approximately US$27 million in credit. In fact, DB had failed accurately to report to SHI its net exposure and a daily value at risk amount and mark to market calculations for the FX trading carried out by Mr. Said. As at 6 October 2008, the true position, unknown to SHI at that time, was that the New York FX PB account had accumulated hundreds of millions of dollars of losses.

(7) Between 14 and 21 October 2008, DB made four wrongful calls for margin to be paid by SHI in respect of the New York FX PB Account amounting to approximately US$436 million. Relying on erroneous information provided by DB and under duress, SHI paid those margin calls.

(8) Subsequently, DB liquidated certain positions of SHI in other accounts and transferred assets (the amount of which is yet undetermined) from SHI's accounts with DB in London and Geneva to DB without authorisation or justification.

(9) By a letter dated 23 October 2008, DB demanded the sum of approximately NOK 2 billion from SHI pursuant to the Equities Agreements. By a letter dated 24 October 2008, DB purported to terminate FXPBA with immediate effect. By a letter dated 4 December 2008, DB demanded the sum of approximately US$120 million from SHI in respect of the New York FX PB Account.

38. In paragraphs 77 to 126 of the New York complaint, SHI alleges ten causes of action against DB giving rise to a claim for US$750 million:

(1) Breach of FXPBA by DB failing to comply with its reporting requirements.

(2) Breach of the Collateral Limitation Agreement by DB failing to meet its reporting requirements and by taking for itself amounts in excess of US$35 million pursuant to wrongful margin calls and wrongful transfers.

(3) Breach of fiduciary duty by DB failing to provide SHI with the required information in relation to the FX trading, misrepresenting and concealing information from SHI and taking assets belonging to SHI.

(4) Conversion by DB's unauthorised transfers of SHI's assets to itself.

(5) Unjust enrichment by reason of DB'S receipt of payment pursuant to the wrongful margin calls and wrongful transfers.

(6) Fraudulent concealment by reason of DB's intentional failure to report the required information as to SHI's net exposure and value at risk in respect of the FX trading and intentional withholding of the truth about the exposure and losses in the New York FX PB Account.

(7) Fraud by reason of material misrepresentations made intentionally by DB.

(8) Negligent misrepresentations made by DB.

(9) A declaration that SHI has no liability to pay any amount to DB in connection with the purported deficiencies or margin calls alleged in the New York complaint.

The London particulars

39. Here too I adopt with slight modifications the summary in SHI's skeleton argument:

(1) DB refers to certain provisions of the agreements between the parties with respect to SHI's FX trading, Equities trading and certain pledge agreements.

(2) DB avers that the accounts maintained by DB in respect of the FX Agreements and Equities Agreements were kept separate.

(3) Between 2006 and 2008, DB carried out various transactions under the Equities Agreements on behalf of SHI. DB does not provide any particulars as to those transactions.

(4) Between 2006 and 2008, DB carried out numerous transactions under the FX Agreements on behalf of SHI. It is alleged by DB that it provided information to SHI that was adequate for it to understand its position in respect of the FX Agreements.

(5) DB alleges that the parties did not agree to limit the exposure of SHI under the FX Agreements or otherwise to vary the FX Agreements and that it was entitled to increase its collateral requirements on 6 October 2008.

(6) In early October 2008, on SHI's instructions, DB sold various assets, and between 10 to 14 October 2008, DB transferred the equivalent of nearly US$300 million to external accounts of SHI and Mr. Vik.

(7) Between 13 October and 17 October 2008, DB made five margin calls on SHI in respect of the FX Agent Transactions (defined in the FX Agreement) pursuant to the AMA Credit Support Annex amounting to in excess of US$650 million.

(8) Four of the margin calls, amounting to nearly US$525 million, were met by DB transferring assets held in SHI's Equities account to SHI's FX account. A margin call made on 15 October 2008 in the sum of US$124,513,350 was not met by SHI.

(9) During October 2008, DB, acting lawfully, closed out and terminated SHI's existing FX positions, terminated FXPBA and transferred the sum of US$43,244,069 from SHI's Swiss account subject to the Pledge Agreement, and the sum of US$28,179,333 from another SHI account to the FX account.

(10) The amount of the deficit on the FX account remaining after the transactions referred to above was US$120,650,166.

(11) On 20 January 2009 DB sent a letter to SHI demanding the sum of US$125,523,086 under MNA in respect of the Equities Account of SHI.

(12) DB alleges that SHI is not entitled to resist performance of the obligations under the Equities Agreements and the FX ISDA Agreement by reason of the matters alleged in the New York proceedings.

Based on the allegations described above, DB claims: (1) the sum of US$125,523,086 pursuant to the Equities Agreements and MNA; and (2) the sum of US$120,650,166 pursuant to AMA, together with interest.

The hearing and written submissions

40. The hearing of SHI's application began on 15 June 2009. It was listed for 2 days. Counsel suggested that the first day might be used for argument on the extent of relevant jurisdiction clauses, and the second for argument on SHI's alternative application for a stay. During the afternoon of 15 June it became clear that this would not be feasible and I gave the case management direction mentioned earlier. Oral submissions by SHI on issue 1 occupied the whole of 15 June and continued until after midday on 16 June. The remainder of 16 June was taken up with DB's oral submissions in answer. At the conclusion of the hearing that day I directed that DB have a short time in which to lodge further written submissions, and that SHI's reply should also be by way of written submissions. DB duly lodged further submissions on 17 June 2009 dealing with various questions I had raised in the course of argument. SHI's reply submissions of 19 June 2009 referred to an important decision of the Court of Appeal handed down the previous day. This was the judgment of the Court of Appeal in UBS AG v HSH Nordbank AG [2009] EWCA Civ 585, [2009] 2 Lloyd's Rep 272. On 22 June 2009 DB, pursuant to directions given by me on 19 June, lodged further submissions dealing with the Court of Appeal judgment and new points in SHI's reply. Also on 22 June 2009 SHI lodged what it called "final reply submissions". When I came to consider these documents I was concerned that two recent decisions might have a bearing on the construction of relevant provisions in the Master Netting Agreement. These were the decision of the House of Lords in Chartbrook v Persimmon [2009] UKHL 38 and the decision of the Court of Appeal in Mediterranean Salvage v Seamar (The "Reborn") [2009] EWCA Civ 531. I asked the parties to address the position immediately before the Master Netting Agreement was made, along with the changes to that position that would be achieved by the Master Netting Agreement, and to identify how the principles in those two cases may assist the court to determine the legal meaning of the Master Netting Agreement. In response to my note SHI lodged further written submissions on 9 July 2009, DB lodged further submissions on 14 July 2009 and SHI lodged reply submissions on 17 July 2009.

Issue 1: the jurisdiction clauses

41. Provisions to unify the rules of conflict of jurisdiction in civil and commercial matters are found in Council Regulation (EC) 44/2001 ("the Regulation"). Article 23 of the Regulation provides:

23 (1) If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either:

a. In writing or evidenced in writing; or…..

42. It is common ground that DB is domiciled in Germany, which is a Member State, and that the jurisdiction clauses relied upon by DB found in the Equities Agreements and AMA are in writing and confer jurisdiction on this court, which is a court of a Member State. Accordingly if the dispute which has arisen falls within those clauses then this court has jurisdiction under Article 23(1).
43. Commercial relationships may give rise to more than one contract. Those contracts may contain jurisdiction clauses in favour of a particular forum. It is not uncommon to find that a particular forum may be specified in one or more contracts, while a different forum is specified in one or more of the remaining contracts. The general approach of the English courts is that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered to be decided by the same tribunal: Fiona Trust v Privalov [2007] 2 All ER (Comm) 1053.
44. However where a contract contains a non-exclusive jurisdiction clause the parties may contemplate that a dispute arising out of the relationship into which they have entered could be decided by more than one tribunal. This is apparent from the decision of the Court of Appeal in Royal Bank of Canada v Co-operatieve Centrale Raiffeisen-Boerenleenbank BA [2004] 2 All ER (Comm) 847. Evans-Lombe J, with whom Thorpe LJ agreed, said at paragraph [21]:

"It seems to me that by entering into an agreement containing a jurisdiction clause with provisions similar to the final paragraph of the jurisdiction clause in issue in this case, the parties must have had in contemplation the possibility of virtually simultaneous trials with all the additional burdens which the judge described since such is an obvious possible consequence of permitting parallel proceedings in the absence of provision in the jurisdiction clause, or elsewhere in the agreement, for the means of avoiding those consequences".

45. There have been cases in which it has been suggested that different aspects of the parties' relationship may be intended to be covered by different jurisdiction clauses. In UBS AG v HSH Nordbank AG [2008] 2 Lloyd's Rep 500 I was concerned with a case where there was scope for jurisdiction clauses to clash. In order to limit that scope, and to ensure the clauses had meaning, I concluded that a person having relevant background knowledge would be driven to the conclusion that each such clause focused upon matters directly relating to the contract in which it was found. As mentioned above, the decision of the Court of Appeal in that case was handed down shortly after the conclusion of argument in the present case. In a judgment with which Ward and Toulson LJJ agreed, Lord Collins of Mapesbury summarised my decision in this way:

51. The judge said that the fundamental question was the meaning of the English jurisdiction clause in the Dealer's Confirmation jurisdiction clause rather than the Kiel MTN Notes jurisdiction clause, because UBS held the Kiel MTN Notes for no more than an instant. The judge accepted that had the contracts in which those clauses were found stood on their own, they should be given a wide construction. But this was a case where the parties had entered into different agreements for different aspects of an overall relationship, with different terms as to jurisdiction.

52. As a matter of general principle the court must seek to identify the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract: Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912-913. The relevant background knowledge in the present case would include knowledge of other contracts forming part of the transaction.

53. When considering the jurisdiction clauses found in the RPSA, the Kiel MTN Notes, and the Dealer's Confirmation, a person having that background knowledge would at once see that there was scope for the clauses to clash. In order to limit that scope, and to ensure that the clauses had meaning, such a person would be driven to the conclusion that each such clause focused upon matters directly relating to the contract in which it was found. It was manifestly incompatible with a non-exclusive New York jurisdiction clause for a matter falling within it also to be the subject of an exclusive English jurisdiction clause.

54. The question in each case was to which contract the dispute in question was properly to be allocated; and the court then applied whatever jurisdiction provisions, if any, that contract might contain: Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] 1 Lloyd's Rep 767. The English jurisdiction clauses were insufficiently wide to cover the dispute set out in the New York complaint. All matters relating to the NS4 Notes, including the Indenture, the Letter Agreement and the RPSA, were subject to the laws of New York. All those agreements contained submissions to the jurisdiction of the New York courts, except for the Letter Agreement which was silent as to jurisdiction and hence effectively agreed that action could be brought in any court of competent jurisdiction. The Letter Agreement would not entitle UBS to sue HSH, a German domiciled company, in England.

55. The focus must be on the cause of action rather than the remedy flowing from that cause of action. Thus a claim to rescission, or for damages based upon the risk of exercise of the put option, was not to be regarded as so directly linked to the Kiel MTN Notes or the Dealer's Confirmation as to fall within the English jurisdiction clauses. The result was that the English court did not have jurisdiction under Article 23 of the Brussels I Regulation.

46. In his conclusions Lord Collins made reference to the decision of Rix J in Credit Suisse First Boston (Europe) Limited –v- MLC (Bermuda) Limited [1999] 1 Lloyds Rep 767. It is desirable to set out what Lord Collins said before turning to that case, his summary of that case, and the conclusions that he reached:

82. Are these claims within the Dealer's Confirmation jurisdiction clause? I accept UBS's submission that the proper approach to the construction of clauses agreeing jurisdiction is to construe them widely and generously: Donohue v Armco Inc [2001] UKHL 64, [2002] 1 Lloyd's Rep 425 at [14]. I also accept that in the usual case the words "arising out of" or "in connection with" apply to claims arising from pre-inception matters such as misrepresentation: Fiona Trust & Holding Corp v Privalov [2007] EWCA Civ 20, [2007] 2 Lloyd's Rep 267 (affd sub nom Premium Nafta Products Ltd v Fili Shipping Co Ltd [2007] UKHL 40, [2007] 4 All ER 951); Deutsche Bank AG v Asia Pacific Broadband Wireless Communications Inc [2008] EWCA Civ 1091, [2008] 2 Lloyd's Rep 619; Ashville Investments Ltd v Elmer Contractors Ltd [1989] QB 488.

83. But the essential task is to construe the jurisdiction agreement in the light of the transaction as a whole. As I suggested in Satyam Computer Services Ltd v Upaid Systems Ltd [2008] EWCA Civ 487, [2008] 2 All ER (Comm) 465, at [93], whether a dispute falls within one or more related agreements depends on the intention of the parties as revealed by the agreements.

84. Plainly the parties did not actually contemplate at the time of the conclusion of the contracts that there would be litigation in two countries involving allegations of misrepresentation in the inception and performance of the agreements. But in my judgment sensible business people would not have intended that a dispute of this kind would have been within the scope of two inconsistent jurisdiction agreements. The agreements were all connected and part of one package, and it seems to me plain that the result for which UBS contends would be a wholly uncommercial result and one that sensible business people cannot have intended.

85. It is fanciful to suppose (as UBS contends) that the Dealer's Confirmation jurisdiction clause had been specially renegotiated to provide expressly for the exclusive jurisdiction of the English court to deal with disputes of this kind, or that the parties must have envisaged the risk of a clash.

86. The Dealer's Confirmation is expressed to be issued pursuant to LB Kiel's US$20 billion Global Medium Term Note Programme and simply confirms the issue of the US$500 Kiel MTN Notes to UBS as one of the dealers on HSH's bond programme. UBS immediately transferred them to NS4. NS4 kept the Kiel MTN Notes as an investment or "collateral" to create income in order to fund payments under the NS4 Notes.

87. I accept HSH's argument that the Kiel MTN Notes are simple AAA-rated bonds that HSH issued pursuant to a pre-existing bond programme. HSH used these Notes (rather than cash) to pay for the NS4 Notes. This dispute has nothing to do with the Kiel MTN Notes, which were no more than the consideration for the NS4 Notes. The parties cannot be taken objectively to have intended that the jurisdiction clause contained in the Dealer's Confirmation (i.e. the method of payment for the investment) would govern every dispute relating to inducement of making such investment.

88. There is no dispute about the issue, sale or performance of the Kiel MTN Notes. Their holder, NS4, is not a party to any of the proceedings. None of the parties to the proceedings advances any claim under the Kiel MTN Notes against any other party. None of the parties suggests there has been any breach of the Kiel MTN Notes, or any misrepresentation in relation to them. The Kiel MTN Notes are supported by a German state guarantee and are virtually equivalent to cash. The misrepresentation claims were made about the Reference Pool, not about the Kiel MTN Notes. The same allegations would be made if Kiel LB had paid for its investment in cash instead of Notes.

89. The New York complaint alleges (inter alia) that (a) UBS induced HSH to purchase the NS4 Notes by misrepresentations concerning, among other things, the credit quality of the Reference Pool to which payments under the NS4 Notes were linked; (b) UBS failed to operate a Commitments Committee, as required by the RPSA, so as to select Reference Pool assets with stable or improving credit profiles, carefully monitor the credit status and quality of each asset, and avoid downgrades. As Justice Lowe stated in his decision of October 21, 2008 (at p 5) (in relation to HSH's first cause of action): "HSH's overarching claim is that UBS failed to maintain the promised high quality of the notes in the Reference Pool, by failing to ensure that the Commitments Committee keep an eye on the condition of the investments."

90. In Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] 1 Lloyd's Rep 767, MLC, a hedge fund, bought Russian bonds from the claimant, an English company, pursuant to two Purchase Agreements containing exclusive English jurisdiction clauses. MLC financed the purchase of the bonds by repurchase transactions with the claimant pursuant to a Global Master Repurchase Agreement ("GMRA"), containing a non-exclusive English jurisdiction clause. When the claimant made a margin call under the GMRA which MLC failed to pay, and the claimant sued MLC in England for the amounts due under the GMRA.

91. MLC then sued the claimant and two of its group companies in New York for securities violations. The claimant sought an anti-suit injunction relying on the exclusive English jurisdiction clauses in the Purchase Agreements. One issue was how much of the subject matter of the New York proceedings arose out of the Purchase Agreements, and was therefore in breach of the exclusive jurisdiction clauses in those agreements.

92. Rix J concluded (at 777):

"then, where the jurisdiction clauses are in conflict, I do not see why the GMRA clause should not prevail: either on the basis that, in a case of conflict on standard forms plainly drafted by CS Europe, MLC should be entitled to exercise the broader rights; or on the basis that the clause in the contract which is closer to the claim and which is more specifically invoked in the claim should prevail over the clause which is only more distantly or collaterally involved."

93. He therefore refused to grant an injunction restraining MLC's claims in New York under the GMRA, because (at 781) the claims were preferably to be viewed as arising out of or in connection with the GMRA rather than the Purchase Agreement and thus were not within the jurisdiction clause in the Purchase Agreement; but if he were wrong about that, the New York court would be in a much better position to analyse the complaint for the purpose of identifying the relevant or more relevant jurisdiction clause.

94. The essence of Rix J's first reason is that under the contra proferentem principle, the intention must be taken to have been that, where a dispute fell within the wording of both jurisdiction agreements, it was the GMRA which was to be taken as the agreed position. The second reason, which he must have meant as a matter of construction, was that the parties must be taken to have intended that, where a dispute fell within both sets of agreements, it should be governed by jurisdiction clause in the contract which was closer to the claim.

95. In this case it is not necessary to go so far. Whether a jurisdiction clause applies to a dispute is a question of construction. Where there are numerous jurisdiction agreements which may overlap, the parties must be presumed to be acting commercially, and not to intend that similar claims should be the subject of inconsistent jurisdiction clauses. The jurisdiction clause in the Dealer's Confirmation is a "boiler plate" bond issue jurisdiction clause, and is primarily intended to deal with technical banking disputes. Where the parties have entered into a complex transaction it is the jurisdiction clauses in the agreements which are at the commercial centre of the transaction which the parties must have intended to apply to such claims as are made in the New York complaint and reflected in the draft particulars of claim in England.

96. I return to the draft particulars of claim to emphasise that the claims raising the misrepresentation issue refer to "the Principal Agreements," the "Related Documents," and to "the Transaction." As I have said, "the Principal Agreements" means all of the documents involved in the Transaction (including the Dealer's Confirmation), and "Related Documents" are "all other written agreements and/or written notifications and/or documents entered into and/or executed by the parties pursuant to or related to or in connection with the Transaction". "Transaction" was defined as HSH's "investment in a multiple tranche synthetic Collateralised Debt Obligation".

97. The action in England is intended to mirror the New York proceedings. I have already emphasised that the essence of the claims for misrepresentation in New York is that HSH was induced to purchase the NS4 Notes in reliance on the fraudulent and negligent misrepresentations, and would not have purchased them in the absence of those representations. No sensible commercial interpretation of the jurisdiction clause in the Dealer's Confirmation could have the result that identical misrepresentation claims would fall both within that clause and within the non-exclusive New York jurisdiction clauses, simply because the consideration for the transaction was the issue of the Kiel MTN Notes. In my judgment the standard form bond issue jurisdiction clause in the Dealer's Confirmation does not apply to claims that the transaction as a whole, and in particular the purchase of the NS4 Notes, was induced by misrepresentation. I am satisfied that the judge's decision was right.

47. I mention here two further recent cases which deal with the principles to be applied generally in the construction of contracts. In Chartbrook v Persimmon [2009] UKHL 38, [2009] 3 WLR 267 it was suggested on behalf of Persimmon that something must have gone wrong with the language used in the relevant contract. The House of Lords agreed. Relevant passages from the speech of Lord Hoffmann include the following:

14 There is no dispute that the principles on which a contract (or any other instrument or utterance) should be interpreted are those summarised by the House of Lords in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 , 912–913. They are well known and need not be repeated. It is agreed that the question is what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. The House emphasised that "we do not easily accept that people have made linguistic mistakes, particularly in formal documents" (similar statements will be found in Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251 , 269; Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2005] 1 All ER 667 , 681–682 and Jumbo King Ltd v Faithful Properties Ltd (1999) 2 HKCFAR 279 , 296) but said that in some cases the context and background drove a court to the conclusion that "something must have gone wrong with the language". In such a case, the law did not require a court to attribute to the parties an intention which a reasonable person would not have understood them to have had.

…

21 I therefore think that Lawrence Collins LJ was right in saying that ARP must mean the amount by which 23.4% of the achieved price exceeds the MGRUV. I do not think that it is necessary to undertake the exercise of comparing this language with that of the definition in order to see how much use of red ink is involved. When the language used in an instrument gives rise to difficulties of construction, the process of interpretation does not require one to formulate some alternative form of words which approximates as closely as possible to that of the parties. It is to decide what a reasonable person would have understood the parties to have meant by using the language which they did. The fact that the court might have to express that meaning in language quite different from that used by the parties ("12 January" instead of "13 January" in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 ; "any claim sounding in rescission (whether for undue influence or otherwise)" instead of "any claim (whether sounding in rescission for undue influence or otherwise)" in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 ) is no reason for not giving effect to what they appear to have meant.

…

24 The second qualification concerns the words "on the face of the instrument". I agree with Carnwath LJ, paras 44–50, that in deciding whether there is a clear mistake, the court is not confined to reading the document without regard to its background or context. As the exercise is part of the single task of interpretation, the background and context must always be taken into consideration.

25 What is clear from these cases is that there is not, so to speak, a limit to the amount of red ink or verbal rearrangement or correction which the court is allowed. All that is required is that it should be clear that something has gone wrong with the language and that it should be clear what a reasonable person would have understood the parties to have meant. In my opinion, both of these requirements are satisfied.

26 That leaves the question of the deduction of C & I, which the judge and the majority of the Court of Appeal regarded as an insuperable obstacle to Persimmon's construction. I cannot see why this should be so. Everyone agrees that the only sum from which C & I can rationally be deducted is the headline price achieved on the sale, so as to arrive at the net amount received by Persimmon. That is accordingly what the parties must have meant. You deduct the C & I from the nominal price achieved and the ARP is the excess, if any, of 23.4% of that net sum over the MGRUV. Giving this meaning to the provision about C & I does not in any way weaken or affect the argument for interpreting the rest of the definition in a way which gives ARP a rational meaning. To say, as Rimer LJ said [2008] 2 All ER (Comm) 387 , para 185, that it requires "rewriting", or that it "distorts the meaning and arithmetic of the definition" is only to say that it requires one to conclude that something has gone wrong with the language—not, in this case, with the meanings of words, but with the syntactical arrangement of those words. If however the context drives one to the conclusion that this must have happened, it is no answer that the interpretation does not reflect what the words would conventionally have been understood to mean.

48. Questions as to the implication of terms arose in Attorney General of Belize v Belize Telecom Limited [2009] UKPC 10. The advice of the Board in that case given by Lord Hoffmann was adopted by the Court of Appeal in Mediterranean Salvage & Towage v Seamar Trading & Commerce Inc [2009] EWCA Civ 531. The principles are conveniently to be found in the judgment of Sir Anthony Clarke MR in the latter case as follows:

8. The correct approach to the question when to imply a term into a contract or other instrument, including therefore a charterparty, has recently been considered by Lord Hoffmann, giving the judgment of the Judicial Committee of the Privy Council, which also comprised Lord Rodger, Baroness Hale, Lord Carswell and Lord Brown, in Attorney General of Belize v Belize Telecom Limited [2009] UKPC 11. I predict that his analysis will soon be as much referred to as his approach to the construction of contracts in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 at 912-3. His analysis in the Belize case is extensive: see [16] to [27].

9. It repays detailed study but for present purposes it is I think sufficient to say that the implication of a term is an exercise in the construction of the contract as a whole: see Trollope & Colls Limited v North West Metropolitan Hospital Board [1973] 1 WLR 601, 609 per Lord Pearson, with whom Lord Guest and Lord Diplock agreed and Equitable Life Assurance Society v Hyman [2002] 1 AC 405, 459, where Lord Steyn said:

"If a term is to be implied, it could only be a term implied from the language of [the instrument] read in its commercial setting."

See Belize at [19] and [20].

…

12. The central part of Lord Hoffmann's reasoning is from [21] to the first part of [25], where he focused on some of the tests which have historically been used to identify when a term is to be implied into a contract. He said this:

"[21] It follows that in every case in which it is said that some provision ought to be implied in an instrument, the question for the court is whether such a provision would spell out in express words what the instrument, read against the relevant background, would reasonably be understood to mean. It will be noticed from Lord Pearson's speech that this question can be reformulated in various ways which a court may find helpful in providing an answer – the implied term must "go without saying", it must be "necessary to give business efficacy to the contract" and so on – but these are not in the Board's opinion to be treated as different or additional tests. There is only one question: is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?

[22] There are dangers in treating these alternative formulations of the question as if they had a life of their own. Take, for example, the question of whether the implied term is "necessary to give business efficacy" to the contract. That formulation serves to underline two important points. The first, conveyed by the use of the word "business", is that in considering what the instrument would have meant to a reasonable person who had knowledge of the relevant background, one assumes the notional reader will take into account the practical consequences of deciding that it means one thing or the other. In the case of an instrument such as a commercial contract, he will consider whether a different construction would frustrate the apparent business purpose of the parties. That was the basis upon which Equitable Life Assurance Society v Hyman … was decided. The second, conveyed by the use of the word "necessary", is that it is not enough for a court to consider that the implied term expresses what it would have been reasonable for the parties to agree to. It must be satisfied that it is what the contract actually means.

[23] The danger lies, however, in detaching the phrase "necessary to give business efficacy" from the basic process of construction of the instrument. It is frequently the case that a contract may work perfectly well in the sense that both parties can perform their express obligations, but the consequences would contradict what a reasonable person would understand the contract to mean. Lord Steyn made this point in the Equitable Life case (at p 459) when he said that in that case an implication was necessary "to give effect to the reasonable expectations of the parties."

[24] The same point had been made many years earlier by Bowen LJ in his well known formulation in The Moorcock (1889) 14 PD 64, 68:

"In business transactions such as this, what the law desires to effect by the implication is to give such business efficacy to the transaction as must have been intended at all events by both parties who are business men"

[25] Likewise, the requirement that the implied term must "go without saying" is no more than another way of saying that, although the instrument does not expressly say so, that is what a reasonable person would understand it to mean. …"

13. Lord Hoffmann then warned against considering the subjective state of mind of the parties or their representatives and stressed the need for the court to be satisfied that the proposed implication spells out what the contract would reasonably be understood to mean. He then stated the Judicial Committee's view that the question how the actual parties would have reacted to the proposed amendment was irrelevant and added that it was not necessary for the implied term to be obvious in the sense of being immediately apparent.

14. Importantly, he concluded his analysis in [26] and [27] by reference to BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 282-283, where Lord Simon of Glaisdale, giving the advice of the majority of the Judicial Committee, said that it was "not … necessary to review exhaustively the authorities on the implication of a term in a contract" but that the following conditions ("which may overlap") must be satisfied:

"(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying' (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract".

Lord Hoffmann expressed the Judicial Committee's opinion thus:

"[27] The Board considers that this list is best regarded, not as series of independent tests which must each be surmounted, but rather as a collection of different ways in which judges have tried to express the central idea that the proposed implied term must spell out what the contract actually means, or in which they have explained why they did not think that it did so. The Board has already discussed the significance of "necessary to give business efficacy" and "goes without saying". As for the other formulations, the fact that the proposed implied term would be inequitable or unreasonable, or contradict what the parties have expressly said, or is incapable of clear expression, are all good reasons for saying that a reasonable man would not have understood that to be what the instrument meant."

15. It is thus clear that the various formulations of the test identified by Lord Simon are to be treated as different ways of saying much the same thing. Moreover, as I read Lord Hoffmann's analysis, although he is emphasising that the process of implication is part of the process of construction of the contract, he is not in any way resiling from the often stated proposition that it must be necessary to imply the proposed term. It is never sufficient that it should be reasonable. This point is clear, for example, from the well-known speech of Lord Wilberforce in Liverpool City Council v Irwin [1977] AC 239, where he rejected at page 253H to 254A the approach of Lord Denning, which was to permit the implication of reasonable terms. He identified two classes of implied term in the case (as here) of a complete, bilateral contract. He said that in a case of established usage the courts are spelling out what both parties know and would, if asked, unhesitatingly agree to be part of the bargain. That is not, in my opinion, this case. Lord Wilberforce added at page 253G:

"In other cases, where there is an apparently complete bargain, the courts are willing to add a term on the ground that without it, the contract will not work – this is the case, if not of The Moorcock … itself on its facts, at least of the doctrine of The Moorcock as usually applied."

Lord Wilberforce stressed that the test is one of necessity. Is it necessary to make the contract work?

16. I should also note that, since the end of the argument, Rix LJ has drawn my attention to what he described in Socimer Bank Limited v Standard Bank Limited [2008] EWCA Civ 116, [2008] Bus LR 1304 at [105] as a useful and authoritative modern restatement of the relevant principles by Sir Thomas Bingham MR, giving the judgment of this court, which also comprised Stuart-Smith and Leggatt LJJ, in Phelps Electronique Grand Public SA v British Sky Broadcasting Limited [1995] EMLR 472.

17. Rix LJ quoted an extensive passage at pages 480 to 482 in Phelps. So I will not do the same but will content myself with these few points, which seem to me to underline the principles stated by Lord Hoffmann but also to stress the importance of the test of necessity. Thus, after saying that both parties accepted the propositions stated by Lord Simon in the BP Refinery case (and quoted by Lord Hoffmann), Sir Thomas Bingham said that they distilled the essence of much learning on implied terms but that their simplicity could be almost misleading. He then said this:

"The courts' usual role in contractual interpretation is, by resolving ambiguities or reconciling apparent inconsistencies, to attribute the true meaning to the language in which the parties themselves have expressed their contract. The implication of contract terms involves a different and altogether more ambitious undertaking: the interpolation of terms to deal with matters for which, ex hypothesi, the parties themselves have made no provision. It is because the implication of terms is potentially so intrusive that the law imposes strict constraints on the exercise of this extraordinary power."

18. Reference was then made to cases in which terms are routinely and unquestionably implied, as in the case of a term that a surgeon will exercise all reasonable care and skill. He added:

"But the difficulties increase the further one moves away from these paradigm examples. … It is much more difficult to infer with confidence what the parties must have intended when they have entered into a lengthy and carefully-drafted contract but have omitted to make provision for the matter in issue. Given the rules which restrict evidence of the parties' intention when negotiating a contract, it may well be doubtful whether the omission was the result of the parties' oversight or of their deliberate decision; if the parties appreciate that they are unlikely to agree on what is to happen in a certain not impossible eventuality, they may well choose to leave the matter uncovered in their contract in the hope that the eventuality will not occur.

The question of whether a term is to be implied, and if so what, almost inevitably arises after a crisis has been reached in the performance of the contract. So the court comes to the task with the benefit of hindsight, and it is tempting for the court then to fashion a term which will reflect the merits of the situation as they then appear. Tempting, but wrong. For, as Scrutton LJ said in Reigate v Union Manufacturing Co (Ramsbottom) Limited [1918] 1 KB 592 at 605:

"A term can only be implied if it is necessary in the business sense to give efficacy to the contract; that is, if it is such a term that it can confidently be said that if at the time the contract was being negotiated some one had said to the parties, 'What will happen in such a case', they would both have replied, 'Of course, so and so will happen; we did not trouble to say that; it is too clear'. Unless the court comes to some such conclusion as that, it ought not to imply a term which the parties have not themselves expressed…"

And it is not enough to show that had the parties foreseen the eventuality which in fact occurred they would have wished to make provision for it, unless it can also be shown that one of several possible solutions would without doubt have been preferred: Trollope & Colls … at 609-10, 613-14."

The significance of both Liverpool City Council v Irwin and the Phillips Electronique case is that they both stress the importance of the test of necessity. Is the proposed implied term necessary to make the contract work? That seems to me to be an entirely appropriate question to ask in considering whether a term should be implied on the assumed facts in this case.

Issue 1: SHI's arguments

49. The question in each case is to which contract the dispute in question is properly to be allocated; the court then applies whatever jurisdiction provisions, if any, that contract may contain. Where there are a number of disputes going on, this process necessarily involves considering the "centre of gravity" of them so that they may be properly allocated. Here the parties had entered into two separate relationships, one concerning the FX trading and the other equities trading. Using Rix J's terminology of "selection of palette", the palette was one which, as regards FX trading, gave primacy to FXPBA both because it was first in point of time and because it was at the top of the contractual hierarchy, facilitating the FX trading. Where the centre of gravity of disputes concerned the FX relationship, it was likely that the parties intended that FXPBA would allocate jurisdiction. Such disputes would not fall within a subordinate agreement such as AMA or any alleged agreement collateral to it. Looking at the present dispute, an objective approach had to be taken. EPBA and LFOA were unimportant, DB made no claim under them. While MNA provided for exclusive English jurisdiction to settle any dispute "arising from or connected with this agreement", the only dispute was about the operation of FXPBA. Indeed, in its submissions in New York DB had said that the London litigation would resolve all issues in the New York action. The London particulars sought to downplay the importance of FXPBA, but even so they identified FXPBA as requiring SHI to post collateral. It was DB's concerns about the FX account that resulted in transfers out of the equities account into the FX account. Had it not been for those transfers all the losses would be in the FX account, and that is where the dispute was, focusing on FXPBA and the collateral limitation agreement.
50. As to the collateral limitation agreement, while DB had applied in New York to dismiss non-contractual claims for lack of merit, no such attempt had been made in relation to the contractual claims. SHI had the better of the argument on the existence of the collateral limitation agreement. In the New York claim SHI said that DB's various breaches of duty had caused it losses of US$750 million. That claim dwarfed DB's total London claim, again pointing to a centre of gravity in New York. DB's FX operations took place in New York, New Jersey and Connecticut. The nature of the dispute was affected by the geographical location of people, it was something that the parties would consider in saying where dispute resolution was to take place.
51. As to AMA, DB attributed force to a non-exclusive jurisdiction clause which it could not bear. The parties did not contemplate proceedings in more than one jurisdiction. Alternatively, if SHI's New York claim could be regarded as relating to or arising from or connected to AMA and MNA as well as FXPBA, the latter should prevail because in a case of conflict of standard form contracts drafted by DB, SHI should be entitled to exercise its broader rights under FXPBA.
52. DB's case in effect was that, subject to its forum non-conveniens motion in New York, there should be concurrent litigation in two places on the same issues and possibly inconsistent judgments. It involved an assertion that an exclusive jurisdiction clause unrelated or only distantly related to the essence of the dispute would trump the jurisdiction provision of the contract out of which the dispute naturally and directly arose, namely FXPBA. This plainly failed to give effect to the parties' intentions and would be regarded by any rational businessman as bizarre. Possible further alternatives involved splitting the allocations so that parts of DB's claim concerning either the FX relationship as a whole or FXPBA and the collateral limitation agreement did not fall within the jurisdiction clause of AMA and MNA. DB had contended that SHI's approach would cause commercial uncertainty. This was misconceived. Substance should take priority over form. DB's claim clearly extended to matters outside the English jurisdiction clauses. DB sought to focus on its causes of action, but this minimised the relevance of FXPBA. The parties had agreed to a series of potentially conflicting jurisdiction clauses arising out of their business dealings with each other, there was inevitably scope for some uncertainty as to where the boundaries of the various jurisdictions were to be drawn.
53. On the present facts DB was entitled to sue in New York, as its "claim" fell within the FXPBA jurisdiction clause. The London particulars were a "Trojan Horse" concealing claims concerning FXPBA within a "debt claim" said to have English jurisdiction. The Court of Appeal decision in UBS had endorsed the approach of Rix J in Credit Suisse. DB's submissions ignored the wording of the jurisdiction clauses, which referred to "action, suitable proceedings" and "disputes", not "claim." There was nothing absurd about having a jurisdiction clause which looked to the dispute between the parties. It was DB's stance, inviting the court to characterise the dispute without any account being taken of the defendant's stance, which was un-commercial. DB had relied on the fact that it did not seek any declaratory relief as to its obligations under FXPBA or the collateral limitation agreement. That was artificial, inviting the court to ignore the obvious realities of the dispute. FXPBA and AMA each contemplated proceedings in more than one jurisdiction. As to that, there might be cases properly attributable to AMA, but this was not one of them.
54. Thus the arrangements made in November 2006 did not involve an agreement that there could be English jurisdiction for a dispute of the present kind. It cannot have been the intention of the parties to abrogate that when making the agreements of January 2008. This meant that the exclusive jurisdiction clause in MNA must be cut down. Even if some variation was contemplated, nevertheless the centre of gravity approach showed that the parties had not intended English jurisdiction for the present dispute.
55. Turning to the court's request for analysis of the position immediately before MNA, FXPBA conferred New York jurisdiction in wide terms: "any action or proceeding relating in any way to this agreement …". In AMA there was agreement that a dispute relating to each agent transaction was subject to jurisdiction of the English court, but under the template for the Master Counterparty Agreement, disputes relating to counterparty transactions were subject to the jurisdiction of the New York court. Although SHI was not a party to this agreement, it represented a series of contracts which were referred to in clause 2 of FXPBA and were available to SHI at the time of entering into FXPBA. Thus it comprised admissible factual background for the purposes of construction of FXPBA and subsequent agreement between the parties. Thus immediately prior to MNA SHI's arguments about scope of jurisdiction clauses in FXPBA and AMA respectively, the centre of gravity or "commercial centre" to use the words of Lord Collins of Mapesbury in UBS limited the scope of the jurisdiction clause in AMA to disputes which did not concern the FXPBA relationship beyond the agent transactions. The agreements of January 2008, objectively construed, did not intend to alter that position. Accordingly only a dispute which did not concern FXPBA or AMA fell within the scope of the jurisdiction clause in MNA. That jurisdiction clause did not purport to amend or limit the jurisdiction clauses in the earlier agreements. It followed that any dispute which prior to MNA fell within the scope of the jurisdiction clause in FXPBA did not fall within the scope of the jurisdiction clause in MNA.
56. The use of the word "exclusive" in the MNA jurisdiction clause reinforced SHI's submission that the scope of that clause must be construed narrowly, otherwise the use of the word "exclusive" would attribute an intention to the parties which they plainly did not have. Clause 12 of FXPBA required that any amendment, modification or waiver should be in writing executed by each of the parties, but there had been no formal amendment here. In MNA the parties had expressly turned their minds as to how a conflict between the equities agreements should be resolved, but they did not agree to subordinate FXPBA to subsequent equities agreements. SHI's contentions would reconcile jurisdiction clauses in FXPBA and MNA, allowing both a sensible and proper scope.
57. Relevant principles from Chartbrook Limited v Persimmon Homes Limited [2009] UKHL 38 supported this approach. Among others, the fact that the court might have to express the meaning of the contract in language quite different from that used by the parties is no reason for not giving effect to what they appear to have meant (paras 21, 26). If it is clear that something has gone wrong with the language, there is no limit to the amount of red ink or verbal rearrangement or correction which the court is allowed to give effect to what a reasonable person would clearly have understood the parties to have meant (para 25). DB had accepted that disputes relating to FXPBA did not fall within the jurisdiction clause in MNA, and it followed that some "corrective" construction of the jurisdiction clause in MNA was required. Similarly as regards the implication of a term, Attorney General of Belize v Belize Telecom Limited [2009] UKPC 10, at paras 18-27, followed by Mediterranean Salvage and Towage v Seamar Trading and Commerce Inc [2009] EWCA Civ 531 at paras 8-9 and 12-18 established that implication of a term is an exercise in the construction of an instrument as a whole read against the relevant background, the central idea being that a proposed implied term must spell out what the contract actually means. DB's complaints that SHI's construction placed impermissible implicit limitations on the language used in jurisdiction clauses in MNA and other equities agreements was misconceived. The correct question was what the relevant provisions would reasonably be understood to mean when read against the relevant background. Here the relevant background gave a compelling case for SHI's construction of MNA. EIMA could not affect the position prior to the January 2008 agreements as it was entirely separate from the FX arrangements made in November 2006. DB's contentions ignored its role as drafter of the conflicting standard form contracts. DB's focus on its claim being within the scope of MNA failed to pay regard to the commercial centre of dispute. The parties could not be presumed to have intended that this dispute was to be canalised into separate parallel proceedings. This would be contrary to the parties presumed intention: see UBS at paragraph 95. With the exception of EIMA, the agreements did not contain the language referred to in Royal Bank of Canada v Rabo Bank from which it was inferred that parallel proceedings were permitted. Conventional principles dictated that in the event of conflict it was the earlier FXPBA and not the later MNA which should prevail: see the finding of Rix J in Credit Suisse that clause 5.2 of the purchase agreement could exert an influence beyond its time, it being conceded that the later agreement (the GMRA) did not exert an influence the other way. The entire agreement clause in MNA provided no basis for inferring that the parties intended to limit the scope of the earlier FXPBA. SHI did not contend for any implied term – it was DB that sought a form of implied limitation of the jurisdiction clause in FXPBA.

Issue 1: DB's arguments

58. The London claims are for debts arising under agreements containing English jurisdiction clauses. DB is the natural claimant and the English courts plainly have jurisdiction. In insisting that its claim be tried in the English courts DB simply seeks to ensure that the general principle that a party should be held to its contractual bargain is upheld. In relation to the debt on the Equities Account, the claim arises under MNA, EPBA, EIMA and LFOA. EPBA is included in this list because it is the source of an event of default leading to termination under MNA. The debt under the FX account arises only under AMA. By contrast with the Equities Account, in relation to the FX account FXPBA is not a source of an event of default. While in UBS and Credit Suisse the court had identified reasons for reading down English jurisdiction clauses, DB's claim for debt under contracts with English jurisdiction clauses did not call for reading down. DB sought no relief under FXPBA. SHI's application was an improper attempt to sever the English jurisdiction clauses and to extend the New York jurisdiction clause in FXPBA. The present case was a stronger case than the CS Europe debt claim which Rix J would have refused to stay in Credit Suisse. The English jurisdiction clauses were "closer to the claim and more specifically invoked in the claim". It is SHI which, like CS Europe, seeks to contend that DB's claims fall within a jurisdiction clause in a different contract to that which is said to give rise to the claim. It could not be the case that DB's claims only fell within the jurisdiction clause in FXPBA. That would give the jurisdiction clause in FXPBA a "halo" effect in circumstances in which the equities agreements and AMA contain their own jurisdiction clauses. Moreover FXPBA was inconsistent with SHI's contention: it contemplated that there would be separate agreements between DB and SHI under which transactional sums would fall due (clause 4) those transactions being entered into in terms providing for the non-exclusive jurisdiction of the English court. A non-exclusive jurisdiction clause could not ever allocate jurisdiction, for it expressly contemplated that claims falling within its scope could be brought elsewhere.
59. DB contended that SHI's argument about "centre of gravity of the dispute" involved an improper focus on SHI's defences rather than DB's claims. The question to be determined was whether a cause of action arising under a contract fell within the jurisdiction clause in that contract. If the answer were to depend on the nature of the defence (this being said to determine the "centre of gravity" of the dispute) that would be unworkable. It would generate the very jurisdictional uncertainty which jurisdiction clauses are designed to avoid. The application of a jurisdiction clause to a cause of action needed to be clear when proceedings in respect of that cause of action are issued. It could not be right that the scope of the jurisdiction clause varied as defences were added or withdrawn. Indeed, if SHI's defences were held to fail, it would follow that DB's claims had fallen within the English jurisdiction clauses all along. There could of course be a defence of transactional set off or circuity, irrespective of any differing jurisdiction clause in the contract relied upon to establish that defence. What SHI was seeking to do however was to force DB to counterclaim in New York in relation to claims under the Equities and AMA agreements. By contrast, nothing in DB's arguments stopped SHI from suing for breach of clause 2 of FXPBA in New York. That was not a dispute "connected with" MNA because the cause of action in New York is not said to be part of MNA. An exclusive jurisdiction clause was designed to achieve a one-stop result, but only as to matters falling within its scope. SHI had raised the spectre of concurrent litigation and inconsistent judgments. However the agreements entered into by the parties plainly contemplated that different jurisdiction clauses would apply to claims under different agreements. SHI's argument presupposed that the parties must have intended a single forum for all their disputes. However the parties need not do so: see the decision of the Court of Appeal held in Royal Bank of Canada v Co-operatieve Centrale Raiffeisen-Boerenleenbank BA; [2004] 2 All ER (Comm) 847. The courts had made it clear that where parties enter into a number of contracts with different jurisdiction clauses some multiplicity of proceedings may be inevitable. This consequence cannot be evaded, as SHI sought to do here, by giving the clause in one agreement an effect which overrode other clauses. The suggested alternative approaches by SHI offered no precise way of identifying which claim fell within which alternative. The London claim simply sought to recover debt on the basis of agreements containing English jurisdiction clauses, and there was no basis for finding that the court lacked jurisdiction in respect of any of these claims.
60. There was no language in the equities agreements to suggest the jurisdiction clauses were not applicable if a defence touched upon or implicated the FXPBA relationship. Nor could a limitation to that effect be implied, for it would cut across the express language of the jurisdiction clauses – indeed no formulation of the purported limitation had been provided. Business efficacy did not compel implication where the jurisdiction clause in FXPBA was non-exclusive and SHI could defend claims brought under the equities agreement by reference to complaints concerning the FX relationship if those complaints gave rise to a defence and if it wished to do so. FXPBA did not give SHI the right to have all arguments concerning the FX relationship litigated in New York because it was non-exclusive, and because it provided for the conclusion of transactional contracts which contained an English jurisdiction clause. SHI itself contended that the London and New York documents and agreements were unrelated. As to the question of which contract was made first, EIMA preceded FXPBA, and SHI's own argument would read FXPBA as not extending to claims which touched or involved a defence implicating EIMA. DB had never suggested that the jurisdiction clause in MNA extended to a claim brought by SHI arising under FXPBA. The parties took care to identify which contracts were designated as an "underlying agreement" to MNA.
61. In the present case DB was aware of the contentions made in New York and the London particulars had anticipated that certain of those claims might be relied upon by way of defence. The question of principle remained one of construction, and jurisdiction could not depend upon whether a defendant has revealed his defences – and indeed whether the defendant had revealed the entirety of the defences. It was not realistic to operate on the basis that DB could begin by suing under the English jurisdiction clauses, only to find out that "as it turned out" SHI's response to those claims were such that the English court did not have jurisdiction at all. A claimant was required to include a judgment regulation statement including one asserting jurisdiction under article 23 when issuing the claim form. The focus must be on the cause of action. The parties could not have intended that the claim would fall within the jurisdiction clause so far as some defences were concerned but not others. The decision of the Court of Appeal in UBS assisted DB. The Court of Appeal in that case focused upon the claims that had been brought (paragraphs 1, 72, 73, 82, 88, 95 & 97). It made it clear that it was necessary to consider under which contract the claims were brought (paragraphs 73 & 88). In the present case the English jurisdiction clauses appeared in the central contacts governing the parties trading relationships. It was not the case that the London particulars brought a claim under FXPBA. Moreover central features of the present dispute were that it was the failure to meet demands for collateral under EPBA and AMA which led to the termination of the equities agreements and the FX agreements respectively.
62. SHI's suggestion in reply that DB's claims fell within the jurisdiction clause in FXPBA was manifestly contrary to the approach taken in November 2006, providing for claims under agent transactions to be the subject to a different jurisdiction clause, and was contrary to SHI's own recognition that the equities and FX accounts were wholly separate. The position immediately before MNA was that debts alleged to arise under AMA fell within non-exclusive jurisdiction clauses, while a complaint concerning FXPBA fell within a non-exclusive New York jurisdiction clause. It cannot have been the intention of the parties in January 2008 that MNA or other equities agreements had the effect of subjecting claims for debt under the equities agreement or AMA to the jurisdiction clause in FXPBA. The present case was not one where something had gone wrong with the language or in which giving the contracts the effect for which DB intended was irrational or commercially absurd. The parties had entered into different, but clear, jurisdiction clauses in different contracts. Accordingly Chartbrook –v Persimmon did not assist SHI. Nor did Mediterranean Salvage and Towage v Seamar Trading Commerce Inc. SHI's assertion that a claim arising under a contract does not fall within the jurisdiction clause in that contract was one which could not be reached by construction, however benevolent the approach. At paragraph 15 the Court of Appeal had maintained the position that necessity rather than reasonableness remained the touchstone of implication.

Issue 1: Analysis

63. This court only has jurisdiction under the Regulation if the Article 23 precondition is met: namely that there is a dispute which falls within the contractual scope of a relevant jurisdiction clause. This means that the fundamental question is as to the contractual meaning of the English jurisdiction clauses.
64. In determining whether that precondition is met, I have to consider whether DB surmounts the hurdle of showing a "good arguable case." I use this expression in the sense explained by Waller LJ in Canada Trust Co v Stolzenberg [1998] 1 WLR 547, analysing the speech of Lord Goff in Seaconsar Far East Ltd v Bank Markazi [1994] 1 AC 438:

… what the court is endeavouring to do is to find a concept not capable of very precise definition which reflects that the plaintiff must properly satisfy the court that it is right for the court to take jurisdiction. … "Good arguable case" reflects in that context that one side has a much better argument on the material available. It is the concept which the phrase reflects on which it is important to concentrate, ie of the court being satisfied or as satisfied as it can be having regard to the limitations which an interlocutory process imposes that factors exist which allow the court to take jurisdiction. …

65. In order to analyse the current position it is necessary in my view to look at how the overall contractual relationship between the parties developed over time. I start with May 2006. The parties entered into EIMA on the terms of the ISDA Master Agreement. It dealt in Section 13(b) with "Proceedings", defined to mean "any suit, action or proceedings". As regards EIMA and AMA I shall adopt the same definition. Notable features of Section 13(b) of the ISDA Master Agreement were the express acceptances that, subject to one exception, nothing in the Master Agreement precluded either party from bringing Proceedings in any other jurisdiction, and that the bringing of Proceedings in any one or more jurisdictions would not preclude the bringing of Proceedings in any other jurisdiction. I shall for convenience call them "the other jurisdiction acceptances." The exception was that the other jurisdiction acceptances, or at least the first of them, did not apply to Proceedings in Contracting States as defined in the Civil Jurisdiction and Governments Act 1982. The exception does not arise in the present case and I shall ignore it for the purposes of my analysis.
66. The other jurisdiction acceptances were the subject of extensive discussion by the Court of Appeal in the Royal Bank case in 2004, two years prior to the making of EIMA. As noted earlier, Evans-Lombe J held that parties who enter into an agreement containing them must have had in contemplation the possibility of virtually simultaneous trials taking place with all the additional burdens that this involved. It was impossible to imply a term that a particular court should take precedence. Mance LJ noted the general approach that when agreeing on a non-exclusive jurisdiction clause the parties cannot have contemplated that if proceedings were commenced in the forum each had agreed as convenient parallel proceedings would still take place in another forum. However that approach could not be transposed to a case involving Section 13(b), for Section 13(b) expressly contemplated the concurrence of parallel proceedings: see paragraph [41]. There is a possible qualification in Mance LJ's judgment at paragraph [35]. As regards the second acceptance it seemed more likely that this referred to duplication of proceedings by the same party. On that basis the first acceptance could be confined to the bringing of proceedings outside England by one party before any proceedings had been begun by the other party in England. This qualification was, however, immaterial to the Royal Bank case because the New York claim had been begun before the English claim. Thorpe LJ agreed with both judgments.
67. Accordingly in May 2006 the parties may be regarded as broadly contemplating two things as regards EIMA. On the one hand if any Proceedings were brought by one party in the English courts then the other party was obliged to submit to the jurisdiction of those courts and waive any objection to the case proceeding in those courts. On the other hand, either party could bring Proceedings in any other jurisdiction, and the bringing of Proceedings in any one or more jurisdictions would not preclude the bringing of Proceedings in any other jurisdiction. I use the expression "broadly contemplating" to allow for Mance LJ's possible qualification. In the present case, as in Royal Bank, the New York claim was begun before the English claim, and I shall therefore not make further reference to that possible qualification.
68. On this basis EIMA did not itself confer jurisdiction on the New York court, but if the New York court had jurisdiction under its own rules then EIMA's jurisdiction clause made it plain that it was not the intention of the parties to preclude proceedings in New York.
69. The parties made three further written agreements in November 2006. AMA, like EIMA, adopted the provisions as to jurisdiction found in Section 13(b) of the ISDA Master Agreement. If no other jurisdiction agreement had been made in November 2006, then it seems to me plain that the arrangements AMA contemplated as to jurisdiction would have been identical to those that I have described for EIMA. If the parties had contemplated that Proceedings might relate to both agreements there would, as it seems to me, be no inconsistency. Should a claim be made under EIMA or AMA or both, either party could make that claim in the English courts, but neither party could say that the jurisdiction clause precluded proceedings in New York if that court had jurisdiction under its own rules.
70. FXPBA contained a non-exclusive jurisdiction clause which lacked the other jurisdiction acceptances. It gave jurisdiction to the New York court for "any action or proceeding relating in any way to this agreement." Thus under FXPBA such a claim could be brought in New York. Even if that claim could also be described as constituting a Proceeding for the purposes of EIMA or AMA, there could be no grounds for complaint under EIMA or AMA, for each of those agreements contemplated that there might be proceedings in New York if that court had jurisdiction. What if there were factual circumstances which related "in any way to FXPBA" and were the subject of Proceedings brought by one of the parties in the English courts under EIMA or AMA? The general approach to a non-exclusive jurisdiction clause would be that in the ordinary course the parties cannot have contemplated that if proceedings were commenced in the forum each had agreed as convenient parallel proceedings would still take place in another forum. However it seems to me clear that the overall relationship between the parties departed from that course in May 2006, and in relation to AMA continued to depart from that course in November 2006. It is in my view impossible to read into FXPBA a ban on proceedings elsewhere once a New York claim was under way. It follows that the jurisdiction clause in FXPBA was not inconsistent with those in EIMA and AMA.
71. Also made in November 2006 was the Swiss pledge. Under that agreement SHI was obliged to bring proceedings in "the place where the respective DBS office is located." DB, however, also had a right to bring an action against SHI before any competent court. Thus as regards proceedings falling within clause 21 of the Swiss pledge DB was entitled to insist that those proceedings take place solely in the place where the respective DBS office was located.
72. Clause 21 of the Swiss Pledge can thus be described as a partially exclusive jurisdiction clause. Here if relevant circumstances involved the Swiss Pledge and either or both of EIMA and AMA there was at least a potential for clause 21 to clash with the jurisdiction clauses in EIMA and AMA. The other jurisdiction acceptances in EIMA and AMA provided expressly for proceedings in courts other than "the place where the respective DBS office is located." Further, if relevant circumstances involved the Swiss Pledge and FXPBA there was at least a potential for clause 21 to clash with the jurisdiction clause in FXPBA which contemplated an ability to sue in other courts which had jurisdiction under their own rules even if those courts were not "the place where the respective DBS office is located." Moreover clause 21 of the Swiss Pledge would, if the respective DBS office were not located in England, clash with the express conferral of jurisdiction on the English courts in EIMA and AMA. Similarly, if the respective DBS office were not located in New York, the Swiss Pledge jurisdiction clause had the capacity to clash with the conferral of jurisdiction on the New York courts under FXPBA.
73. If circumstances were to arise in England and Wales under which a clash between the Swiss Pledge agreement and one or more of EIMA, AMA or FXPBA had to be resolved, then the court would begin by turning to paragraph 95 of the judgment of Lord Collins in UBS. Just as the Dealer's Confirmation in that case was a "boilerplate" jurisdiction clause primarily intended to deal with technical banking disputes, so as it seems to me the Swiss pledge jurisdiction clause was primarily intended to deal with technical questions as to the extent and nature of the pledge. It would have to give way to the jurisdiction clauses in the agreements at the commercial centre of the transaction. Those clauses, however, in EIMA, AMA and FXPBA, remain clauses which do not clash, each of them contemplating proceedings in more than one jurisdiction.
74. Thus it seems to me as a matter of contractual entitlement to sue in a particular jurisdiction, the position in November 2006 was that any Proceedings could be begun in England if relating to AMA or EIMA, and it would not matter so far as contractual entitlement was concerned that the claim also fell within the FXPBA jurisdiction clause. There are principles of construction adverse to a party whose standard form is used. As at November 2006, however, there was no practical difference between the jurisdiction clauses and accordingly those principles do not come into play. There is no such inconsistency in the contractual entitlements as would require the court to determine that one or other of these three agreements was "at the commercial centre of the transaction". No contractual primacy was afforded to any one jurisdiction clause. Questions such as geographical location of events, size of claim, strength of claim, choice of forum under counterparty agreement and the like might be relevant to questions of case management arising for consideration by courts in differing jurisdictions. They would not on this analysis have any bearing on the analysis of contractual entitlement to sue in a particular location.
75. The result as regards the equities and FX accounts is that prior to January 2008 either side was contractually entitled to bring Proceedings under EIMA or AMA in the English courts. If the other side said that its defence involved issues concerning FXPBA, such a suggested defence would not affect that contractual entitlement. It might affect how the English court managed the case, but that is a different question.
76. Did that position change in January 2008? It was not affected by LFOA, for that contained another non-exclusive jurisdiction clause and can thus be analysed in the same way as FXPBA. A potential clash could arise under OSLA, for it required a reference to arbitration of "all claims, disputes and matters of conflict between the parties arising hereunder" and added that no action should be brought upon any issue between the parties or in connection with OSLA until it had been submitted to arbitration and an award made. Here it seems to me the position is analogous to that in relation to the Swiss Pledge. OSLA is concerned with technical matters as to security, and to the extent that there is a clash with the agreements at the centre of the transaction it must give way to those agreements.
77. I turn to the exclusive jurisdiction clauses in MNA and EPBA. Normally the English courts give a broad meaning to such clauses – see the cases cited in UBS. If the jurisdiction clauses in MNA and EPBA were given a broad meaning there would be scope for a considerable clash with the jurisdiction clauses in the earlier agreements. Here it seems to me that the court must ask whether and to what extent the parties by agreeing on the jurisdiction clauses in MNA and EPBA intended to vary the previous arrangements enabling concurrent proceedings in more than one jurisdiction.
78. As indicated earlier, I start with paragraph 95 of the judgment of Lord Collins in UBS. I am willing to assume that it is DB's "boilerplate" which was used for the exclusive jurisdiction clauses in MNA and EPBA. However I cannot say that these jurisdiction clauses were primarily intended to deal with technical banking disputes. They were both at the heart of the new and extended arrangements for transactions involving equities. Even allowing for principles of construction adverse to a party whose standard form is used, it is not possible to say that the parties intended that these jurisdiction clauses should defer to another central agreement. MNA, in particular, was designed to govern the position where termination of agreements concerning the equities account led to one party or the other saying that a debt was due. It made it quite clear that any claim for such a debt had to be made in the English courts. The tests which I must apply in this regard are those set out in Chartbrook v Persimmon and Mediterranean Salvage & Towage v Seamar Trading & Commerce Inc. Suppose a reasonable businessman with knowledge of the background were asked, would the parties intend that this obligation as to where to sue for debts arising under MNA should give way to the jurisdiction clauses in earlier agreements? In my view, for the reasons advanced by DB, there can be only one possible answer: the parties would not have had any such intention.
79. The consequences of this answer are not as extreme as SHI suggests. DB accepts that the English exclusive jurisdiction clauses do not entitle it to bring a claim in England raising issues as to the rights or wrongs of what has occurred on the FX account. Those issues may arise by way of defence, and indeed the London particulars to an extent anticipate them. That does not mean however that there is a contractual entitlement to insist that those issues are resolved in London – whether they are resolved here will be a matter for case management by the English court in the light of relevant domestic and European legislative provisions.
80. It follows that in January 2008 the parties' relationship was one where under EIMA and later equities agreements DB was entitled to bring its debt claim here. Nor did anything that occurred in January 2008 affect DB's pre-existing entitlement to issue proceedings in London under AMA. Accordingly on issue 1 I hold that the London claim falls within the jurisdiction clauses relied upon by DB.

Issue 2: service of process clauses

81. DB asserted that as the London claim had been served within the jurisdiction on SHI's appointed process agent, Clifford Chance, it was necessary for SHI to show that the London claim did not fall within the ambit of the clauses by which SHI appointed Clifford Chance as its process agent to accept service of proceedings in London. There had been no appointment of an agent for service of process in FXPBA, and there was therefore no room for an argument that the service clauses in the various contracts be construed "as a whole". The effect of SHI's argument was that the nature of its (disputed) defence could deprive DB of its contractual right to serve proceedings on an appointed agent in England.
82. SHI responded that DB presumably relied on CPR 6.11. All that had happened was that a person had been nominated. That could not found substantive jurisdiction. CPR 6.11 was not a free-standing head of jurisdiction, there was a question nevertheless as to what would be good service. In EIMA and AMA the intention of provision concerning service of process was not to extend jurisdiction, it was merely the method by which proceedings could be served. It was true that the provision of an address for service here meant that there would be no need to seek permission to serve out. Nonetheless the service would only be valid service if it concerned a matter which fell within the contemplation of the contract as a matter which could be the subject of such service. The same questions of construction arose in relation to service of process as arose in relation to the jurisdiction clauses.
83. In the light of my conclusion on issue 1 I can deal with this aspect of the matter briefly. A factual question was raised as to whether an agent for service of process had indeed been nominated under EIMA, but I do not need to investigate this. In oral submissions on behalf of DB it was accepted that questions of construction arise. To my mind any reasonable person having knowledge of the express arrangements made for jurisdiction would conclude that if the parties' express arrangements as to jurisdiction were not intended to confer jurisdiction in relation to a dispute, then the service of process clause cannot have been intended to bring about a different result. Conversely the service of process clauses do not of themselves confer jurisdiction. Service within England and Wales would only confer jurisdiction by virtue of the jurisdiction agreements made by the parties.

Conclusion

84. For the reasons I have given this court has jurisdiction in relation to the London claim.