Jurisdiction

On July 19, 2007, JP Morgan Chase Bank NA (JPM), an American investment bank with branches and subsidiaries in Germany and the United Kingdom, and Berliner Verkehrsbetriebe (BVG), a transportation provider headquartered in Berlin, Germany, concluded via a trade confirmation an “Independent Collateral Enhancement Transaction” involving a Swap Contract that contained a clause conferring jurisdiction on the English courts. Under the terms of the Swap Contract, BVG agreed to pay JPM up to $220 million in the event of default on payment by certain third-party companies.

After JPM brought an action before the English courts designed essentially to enforce the contract on the basis of a clause conferring jurisdiction, BVG brought a parallel action asking the German courts, inter alia, to declare the same contract void because its subject matter was ultra vires. Ultimately the Court of Appeal of England made a reference for a preliminary ruling by the Court of Justice of the European Union (Third Chamber).

The issue the Court of Justice addresses is whether the scope of Article 22(2) of EC Regulation 44/2001 extends to “proceedings in which a company or legal person objects, with regard to a claim made against it stemming from a legal transaction, that decisions of its organs which led to the conclusion of the legal transaction are ineffective as a result of infringement of its statutes.” [613] The issue was complicated by a divergence in the wording of various language versions of Article 22(2). As the Court of Justice describes it, “According to some of the language versions, the courts where a company or other legal person or an association of natural or legal persons has its seat have exclusive jurisdiction: ‘in the matter of ’ the validity of its constitution, its nullity or its dissolution or of the validity of the decisions of its organs. By contrast, other language versions provide for such jurisdiction where proceedings have such a question as their ‘object’ or ‘subject-matter’. The second of those forms of wording suggests, unlike the first, that only proceedings in which the validity of a company’s constitution or of a decision of a company’s organs is raised as the primary issue are covered by that provision of Regulation 44/2001.” [614-615]

The Court notes that it had been wellestablished case law that the various-language versions of a text of EU law must be given a uniform interpretation, so that in the case of a divergence among...