Commercial Court considers jurisdiction dispute concerning an Icelandic bank’s insolvency regime and multiple jurisdiction clauses

19/10/11

Lornamead Acquisitions sued Kaupthing, an Icelandic bank, in the Commercial Court for declarations that Lornamead was not liable to Kaupthing under certain facility arrangements. Lornamead's case was that the effect of certain agreements (which were subject to English law and jurisdiction) was to extinguish any claim Kaupthing might otherwise have had under various "Hedging Confirmations". The latter were expressed to be governed by Icelandic law and subject to the exclusive jurisdiction of the Reykjavik Court. There were, therefore, competing or arguably conflicting jurisdiction clauses.

Kaupthing challenged the jurisdiction of the English Court on two broad bases. First, that the effect of the relevant Icelandic insolvency regime meant that this dispute had to be resolved in Iceland. Secondly, that as a matter of interpretation and in accordance with the approach in UBS v HSH Nordbank [2009] EWCA Civ 585, the "centre of gravity" of this dispute meant that it was closer to the contract containing the Icelandic jurisdiction clause and therefore the English jurisdiction agreements did not apply.

Following the hearing before Gloster J and whilst her judgment was reserved, the Commercial Court (Burton J) gave judgment in another jurisdiction dispute concerning the insolvency regime pertaining to Kaupthing: Rawlinson and Hunter Trustees SA v Kaupthing Bank hf. Gloster J carried out her own review of the material but went on to hold that, since the Burton J decision was due shortly to be heard upon appeal to the Court of Appeal, the correct approach was for her to follow his decision but give leave to Kaupthing to appeal to the Court of Appeal in the present proceedings.

The learned Judge rejected Kaupthing's alternative argument based upon the construction of the multiple jurisdiction clauses.

The judgment is here.