Adjudication without Frontiers
Edited by Horatia Muir Watt, Lucia Bíziková, Agatha Brandão de Oliveira and Diego P. Fernandez Arroyo
Chapter 22: Financial markets: Banco Santander v. Transport Companies
This judgment handed down by the English High Court concerned the validity of nine derivative transactions, in the first affair ever having been litigated under the rules of the 2015 Financial List. Significantly from the point of view of private international law, the debate turned on what makes a contract international, as opposed to domestic, under Article 3(3) of the Rome Convention 1980 (now Regulation Rome I). According to this provision, Where all other elements relevant to the situation at the time of the choice are located in a country other than the country whose law has been chosen, the choice of the parties shall not prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement. In this case, both the claimant Banco Santander Totta and the defendants, Companhia de Carris de Ferro de Lisboa SA, Sociedade Transportes Coletivos do Porto SA, Metropolitano de Lisboa and Metro do Porto SA, were from Portugal. The defendants were public sector transport companies running the metro, bus and tram in Lisbon and Porto. They engaged in a number of long-interest rate swaps with Banco Santander between 2005 and 2007. These swaps took place under ISDA Master Agreements, subject to English law and their national jurisdiction. The swaps were very risky given their long life-span and the volatility of interest rates.
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