C-144/10 Berliner Verkehrsbetriebe (BVG) Anstalt des Offentlichen Rechts (Berliner) v JPMorgan Chase Bank NA, Frankfurt Branch, (CFI, Third Chamber, 12 May 2011) The European Court of Justice has provided clarification – and at the same time, welcome news for banks – in a landmark ruling on Article 22(2) of Regulation 44/2001 (Brussels Regulation) which implements the Brussels Convention on governing law. The decision, that Article 22(2) should be interpreted narrowly, serves to prevent parties from evading the effect of a contractual jurisdiction clause (and thus the requirement for the case to be heard in a particular EU Member State) on the basis that the decision to enter into the contract was invalid. Jurisdiction has long been a thorny issue, particularly in cross-border financial disputes, and banks in particular have found themselves subject to jurisdictional challenges (often by local authorities) on the back of Article 22(2) Brussels Regulation. It was important for the ECJ to provide clarity and guidance on the remit of Article 22(2) to avoid a potentially unsavoury position in any dispute where the decision-making of a contracting company is called into question, and the jurisdiction of the Member State where the company has its seat automatically overrides an agreed jurisdiction clause. This might apply despite other elements of the dispute pointing to a close connection with the contractually agreed Member State. In the subject case, a German public transport authority, Berliner Verkehrsbetriebe (BVG) sought, unsuccessfully, to rely on Article 22(2) Brussels Regulation to argue that Germany was the appropriate Member State to hear its derivatives swap contracts dispute with JPMorgan Chase Bank NA (JPM).
Issue in Dispute
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