The Commercial Court has granted declaratory relief concerning a bank’s rights under an interest rate hedging arrangement governed by the 1992 ISDA Master Agreement: BNP Paribas SA v Trattamento Rifiuti Metropolitani SPA [2020] EWHC 2436 (Comm).

The decision is of particular interest for the court’s finding that it was appropriate to grant a declaration that certain non-reliance provisions contained in the Schedule to the ISDA Master Agreement gave rise to a contractual estoppel, so that the defendant was estopped from contending, for example, that it had relied on any representations given by the bank as investment advice or a recommendation to enter into the hedging transaction. The court also rejected the defendant’s argument that the standard ISDA entire agreement clause was not effective and that the defendant was able to rely on separately negotiated terms of the Financing Agreement as prevailing over the ISDA terms.

The decision also provides helpful guidance on the correct approach to applications for negative declaratory relief: the touchstone will be whether there is any utility in the claimant obtaining the negative declarations sought. The court noted a number of specific limitations on the grant of declaratory relief, including that the court should not entertain purely hypothetical questions and there must be a real and present dispute between the parties as to the existence or extent of a legal right between them (which need not fall within the jurisdiction of the English court).

For more information see this post on our Banking Litigation Notes blog.