ING v Santander - CLARA JOHNSON - South Square
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SOUTH SQUARE DIGEST March 2021 www.southsquare.com ING v Santander CLARA JOHNSON
ING v Santander 27
The insolvency of Marme Inversiones
2007 S.L.U (“Marme”) in 2014 has
brought much varied and interesting
litigation to this jurisdiction. The most
recent case is no exception. In ING
Bank N.V. & Anor v. Banco Santander S.A.
[2020] EWHC 3561 (Comm) Mrs Justice
Cockerill had to decide whether the
English court had jurisdiction to hear
the claim brought by ING, or whether,
as contended by Santander, it could only
be brought in the Spanish Insolvency
Court as ancillary proceedings in
Marme’s liquidation.
This involved the examination of two
issues: (1) whether Santander was
bound by an exclusive jurisdiction
clause entitling ING to rely upon
Article 25 of the Brussels Recast
Regulation (Regulation (EU) No
1215/2012) as founding the jurisdiction
of the English court, and (2) whether
the claim was nonetheless excluded
from the scope of the Brussels
Recast Regulation under Article 1(2)
(b) because it concerned “proceedings
relating to the winding-up of insolvent
companies or other legal persons, judicial
arrangements, compositions and analogous
proceedings” and therefore fell within
the scope of the Insolvency Regulation bid, Sorlinda agreed to assume Marme’s retain the loan interest, relying on the
(Regulation (EC) No 1346/2000). contingent and non-contingent exclusive jurisdiction clauses in the
liabilities, which included sums due to Marme Agreements. The relief sought
Background
ING under the Marme Agreements. by ING mirrored the relief sought by
In 2008 a syndicate of eight lenders, Sorlinda in the ancillary proceedings.
Sorlinda took the position that as a
including ING, entered into a loan
result of two rulings by the Spanish Effect of the Marme Agreements
facility for €1.5 billion and related swap
Supreme Court concerning the
agreements with Marme, to finance the The parties disagreed on the meaning
recognition and accrual of interest
acquisition of the Ciudad Financiera, and effect of the assumption by
on secured loans after the opening
Santander’s headquarters located just Sorlinda of Marme’s liabilities:
of Spanish insolvency proceedings,
outside Madrid. The loan agreement and Santander’s position was that Sorlinda
the interest due under the Marme
the swap agreements (the latter in ISDA had agreed with the Insolvency
Agreements had not properly accrued
Master Agreement form (the “Marme Receiver to provide sufficient funds
and was not payable by Sorlinda.
Agreements”)) contained exclusive to pay Marme’s insolvency liabilities
In December 2019, Sorlinda issued
jurisdiction clauses in favour of the as the consideration for the transfer
ancillary insolvency proceedings in
English Courts. of the Ciudad Financiera. ING argued
the Spanish Insolvency Court seeking
Sorlinda had assumed a direct
In March 2014, shortly after the loan declarations as to the entitlement of
liability to Marme’s creditors.
and interest fell due, Marme entered ING to retain interest paid under the
into a voluntary insolvency process loan agreement and to be paid interest The Court received expert evidence on
in Spain. As part of the insolvency under the swap agreement. the scope and effect of the assumption
procedure, a Liquidation Plan was of liabilities under Spanish law in the
On 2 January 2020, Sorlinda merged
approved by the Spanish court and context of Marme’s liquidation. The
into Santander. In February 2020, ING
a tender process commenced for the experts agreed that there had been no
issued proceedings in the English High
acquisition of Marme’s assets, i.e. the novation of the Marme Agreements, but
Court against Santander for payment
Ciudad Financiera, and its liabilities. disagreed as to whether there had been
of outstanding swap interest and a
Sorlinda Investments S.L.U. (“Sorlinda”) a succession of or assumption of direct
declaration that it was entitled to
was the successful bidder. As part of its liability under the Marme Agreements.
SOUTH SQUARE DIGEST March 2021 www.southsquare.com
Whilst acknowledging that both The Court rejected ING’s arguments on of a claim. ING relied on, inter alia the
perspectives were arguable, Mrs Justice this point, finding that the Tilly Russ case of F-Tex SIA v. Lietuvos-Anglijos UAB
Cockerill preferred the analysis of line of authority was indeed restricted Jadecloud-Vilma [2013] Bus. L.R. 232 [18]
Santander’s expert, Professor Virgós to bills of lading; and that considering to [51], in which an insolvent German
(co-author of the Virgós-Schmit Report, whether a de facto succession had taken company had made a pre-liquidation
a key document in the legislative place went beyond the rule which transfer to a third party in Lithuania.
history of the Insolvency Regulation requires jurisdiction to be determined
Santander’s position was that the case
and often referred to by European by the relevant national law.
fell squarely under the Insolvency
Courts), that in the absence of clear
The Insolvency Regulation/ Regulation. First and foremost, the
and unequivocal consent of all Marme’s
Brussels Regulation Dichotomy relief sought by ING concerned ‘core
creditors amongst other factors,
matters’ in the insolvency proceedings,
Sorlinda had not become directly liable Although the Court’s finding in relation
namely, the conduct, course and effect
to ING under the Marme Agreements. to Article 25 was sufficient to determine
of the insolvency proceedings which
The actual effect was that Sorlinda had the application, the Judge nonetheless
were all subject to the supervision,
assumed a commitment to the Marme considered whether the Court’s
control and determination of the
Insolvency Administrator to pay sums jurisdiction over ING’s claim was to be
Spanish court. Alternatively, the relief
to enable Marme’s liabilities in the characterised as a civil and commercial
amounted to an ‘ancillary matter’ and
insolvency to be discharged. matter under the Brussels Recast
was an action which derived directly
Regulation, or whether it was excluded
The Jurisdiction Clause from and was closely connected to
from the scope under Article 1(2)(b) as
Marme’s liquidation. In that context, it
The primary ground of Santander’s “proceedings relating to the winding-up of
argued that the decisive factor was the
application was that ING could not rely insolvent companies or other legal persons,
legal basis of the action and whether it
on Article 25 of the Recast Brussels judicial arrangements, compositions
had its source in ordinary rules of civil
Regulation because Santander was and analogous proceedings”. If it was
and commercial law or in derogating
not a party to the Marme Agreements excluded, it was common ground that it
rules specific to insolvency, relying
containing the exclusive jurisdiction fell under the Insolvency Regulation.
on Nickel & Goeldner Spedition GmbH v
clauses on which ING relied, and did not
ING argued the matter fell under the “Kintra” UAB (Case C-157/13) [2015] QB 96
otherwise agree to be bound by them.
Brussels regime: although Santander’s at [27] and Tünkers France v Expert France
It was common ground that because rights and obligations originated in (Case C-641/16) [2018] I.L.Pr. 7 at [22].
the governing law of the Marme Marme’s insolvency, now those rights
The Judge accepted that fairly
Agreements was English law, the had been assumed there was no longer
compelling cases could be made for
question of whether Santander was any relevant link to the winding up, so
both analyses but considered that she
bound by the exclusive jurisdiction Santander’s position was analogous to a
had to approach the issue in two stages.
clause was to be determined by English third party who had taken assignment
law. It was further agreed that because
the Marme Agreements prohibited
transfer or assignment without the
consent of all lenders, there was no
novation under English law.
ING sought to argue that this situation
fell within a line of cases concerning
transfers of obligations in bills of lading
cases, starting with the Tilly Russ [1985] 1
QB 931, so that Santander was bound by
the exclusive jurisdiction clause in the
Marme Agreements notwithstanding
that it had not signed or accepted it.
ING argued that if as a matter of fact a
transfer of the rights and obligations
of the Marme Agreement had taken
place, then the English law should treat
that as succession under English law.
ING invited the Court to accept this
latter submission notwithstanding
that neither English law nor Spanish
law provided that succession of those
obligations had taken place.
ING v Santander 29
The first was to ask what is the legal Accordingly, the claim was excluded Robin Dicker QC and Clara Johnson
basis of the claim - is it derived directly from the Brussels regime, and acted for Banco Santander SA
from the insolvency, and how closely jurisdiction determined by the
Felicity Toube QC and Marcus
connected is it with the insolvency? Insolvency Regulation. The Court
Haywood acted for ING Bank NV
The Judge looked to the formulation accordingly granted the declaration that
of ING’s claim in the pleadings, which it had no jurisdiction to hear the claim.
explicitly raised the issue of Sorlinda’s
Comment
liability to all of Marme’s creditors, the
Spanish insolvency proceedings, and to The Judge’s reasons for declaring that
the Liquidation Plan. She determined the Court had no jurisdiction to hear
that the legal basis of ING’s claim was the claim were, on both issues,
inextricably a part of the assumption consistent with well-established
of liabilities which made Sorlinda European and domestic jurisprudence.
(subsequently Santander), liable to In relation to the second issue, as the
ING and (on ING’s case) a party to the Judge noted, compelling arguments
Marme Agreements. could be made for both analyses.
Indeed, in many cases there will
The second stage was to review that
be a fine line between the Brussels
analysis in light of established case
Recast Regulation and the Insolvency
law. The Judge found this case was
Regulation. This decision serves as a
distinguishable to the cases relied on
reminder that in cases where there are
by ING. It was accepted that similar
factors pointing in both directions, a
points could be made to those in F-Tex,
weighty factor will be the legal basis
but in this case the link to insolvency
of the action and whether it has its
was plainly closer, and unlike F-Tex the
source in ordinary rules of civil and
dispute could not be detached from the
commercial law or in derogating rules
insolvency event. In this case, it could
specific to insolvency.
be established that there was a direct
and close link to the insolvency process
- albeit a more complex one than in
the cases considered.
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