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Commercial Court gives ruling on Judgments Regulation, and upholds its own jurisdiction


UBS AG, London Branch v Kommunale Wasserwerke Leipzig GmbH, Commercial Court judgment of 15 October 2010 [2010] EWHC 2566 (Comm)

The Commercial Court (Gloster J) has handed down a judgment concerning the interpretation of the exclusive jurisdiction provisions in Article 22 of the Judgments Regulation (validity of company constitution and decisions) and the "first seised" criterion in Article 30.

UBS and Kommunale Wasserwerke Leipzig (KWL), which is charged with the supply of water to the German city of Leipzig, concluded a complex credit default swap agreement in 2006.  Under one aspect of this agreement, KWL agreed to provide credit default protection to UBS in respect of a portfolio of entities.  Following a number of alleged credit events, UBS has sued KWL in the English courts to enforce the swap.  KWL contends that the swap is invalid and outside its corporate powers.

KWL applied for a declaration that the claim falls within the exclusive jurisdiction of the German courts under Articles 22(2) and 25 of the Judgments Regulation, even though issues other than the validity of the decision to enter into the swap may also be raised in the proceedings.  Gloster J held that the German courts do not have exclusive jurisdiction under the approach set out by the Court of Appeal in JPMorgan v Berliner Verkehrsbetriebe [2010] EWCA Civ 390. The Judge held that the English proceedings were not likely to be principally concerned with issues of corporate capacity, and that the sound administration of justice did not require the proceedings to be tried in Germany.

KWL also sought a stay of the English proceedings on the basis that the German court was first seised of a parallel claim brought by it in the Leipzig court.

Gloster J rejected the contention that the German court was first seised, holding that UBS (which issued its claim before the parallel German claim) was under no obligation immediately to take all steps to see that its claim was served.

The judgment is here.

Mark Hapgood QC and Richard Slade QC appeared for UBS; Tim Lord QC and Sarah Abram appeared for KWL.