BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
FINANCIAL LIST (COMMERCIAL COURT – KBD)
(ON PAPER)
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
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DEXIA S.A. |
Claimant |
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- and - |
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REGIONE EMILIA ROMAGNA |
Defendant |
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The Defendant has solicitors on the record but did not appear.
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Crown Copyright ©
MR JUSTICE BRYAN:
3.1. Dexia was the successful party in all respects, and it follows there should be an order for Emilia Romagna to pay Dexia's costs of the proceedings.
3.2. Costs should be assessed on the indemnity basis pursuant to CPR 44.5 in circumstances where Dexia has a contractual entitlement to be paid its costs under the indemnity in the Master Agreement, as recognised in paragraph 182 of the Judgment and reflected in paragraph 21 of the draft Order provided to the Court.
3.3. In the circumstances of this case, it is appropriate for there to be a detailed assessment of costs and an interim payment on account of those costs. Dexia is content for the Court to assess the amount of the interim payment on the papers, by reference to Dexia's Schedule of Costs filed on 12 December 2024.
5.1. Clause 11 of the Master Agreement contains an indemnity requiring Emilia Romagna to "indemnify and hold harmless [Dexia] for and against all reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement".
5.2. In circumstances where I have recognised in the Judgment (at [178]), that Emilia Romagna has breached Clause 13 of the Master Agreement by commencing the Italian Proceedings, and where Dexia brought the present English for the "enforcement and protection of its rights under [the Master Agreement]" within the meaning of Clause 11, I am satisfied that Dexia has a contractual entitlement to be indemnified by Emilia Romagna for the costs of these proceedings.
"(1) Subject to paragraphs (2) and (3), where the court assesses (whether by summary or detailed assessment) costs which are payable by the paying party to the receiving party under the terms of a contract, the costs payable under those terms are, unless the contract expressly provides otherwise, to be presumed to be costs which—
(a) have been reasonably incurred; and
(b) are reasonable in amount, and the court will assess them accordingly.
(2) The presumptions in paragraph (1) are rebuttable. Practice Direction 44—General rules about costs sets out circumstances where the court may order otherwise."
9.1. The proceedings were clearly of real importance to Dexia and of significant value (CPR 44.3(5)(a) and (b) and 44.4(3)(b) and (c)). The proceedings concerned Dexia's ability to enforce a Transaction with an initial notional amount of approximately €142 million, and avoid Emilia Romagna using the Italian Courts, and Italian law arguments, to avoid its obligations under an English law contract subject to exclusive English jurisdiction.
9.2. Dexia has been previously, and still is currently, involved in a number of similar cases and the outcome and principles established in this case will have repercussions for those other cases and, indeed, other on-going derivative transactions to which Dexia is a party that could be challenged by Italian public authorities and territorial entities.
9.3. The proceedings raised complex issues of Italian finance and public law (CPR 44.3(5)(c) and
44.4(3)(d)) and accordingly required extensive skill, effort and specialised knowledge, including in particular specialised knowledge of Italian law (CPR 44.4(3)(e)). I am satisfied that Dexia reasonably had to incur the costs of obtaining foreign law expert evidence (given Italian law is not sufficiently similar to English law) and derivatives expert evidence, and also to prepare relevant witness evidence. Dexia limited the amount of foreign law evidence through the use of Civil Evidence Act notices in respect of previous English decisions.
9.4. Dexia also had to cover off all of the various Italian law arguments that Emilia Romagna has attempted to run in Italy and, due to Emilia Romagna's non-participation, to raise points that it might have raised had it participated. Regardless of the obvious lack of merit of many of the Region's points, they have had to be dealt with in expert evidence and through witness statements going to the factual assertions that underpin them.
9.5. I am satisfied that the costs incurred have also been caused by Emilia Romagna's conduct in refusing to engage with the proceedings. Dexia has had to engage in efforts to serve all documents on Emilia Romagna and has been unable to proceed by consent, which has necessitated applications to the Court for directions in respect of matters that would ordinarily have been agreed between the parties.
9.6. It is also appropriate to take into account costs in similar litigation: see paragraph 44.3.3 of the White Book. The amounts sought by Dexia are lower than the costs that it incurred in Brescia, which were £638,394 (see paragraph 3(4) of the Brescia costs judgment). The costs in both cases are far lower than the costs Dexia was awarded by this Court in Busto Arsizio, which were €3.6 million (£3 million using the exchange rate on the date of judgment). Although Busto Arsizio was a contested trial, and so one would expect the costs to be higher, I consider that it is indicative of the reasonableness of the costs in this case that Dexia has incurred less than a quarter of the amount of costs awarded in Busto Arsizio.