Given the warnings that Greece may be on the verge of bankruptcy, the risk of Greek counterparties potentially being deprived of access to banking services in Greece and defaults following under ISDA contracts has increased.
Where litigation may follow under contracts entered into under the 1992 and 2002 ISDA Master Agreements, counterparties are likely to need to know if the English Court will have exclusive or non-exclusive jurisdiction to determine such disputes.
The 1992 ISDA Master Agreement provides that, where the 1992 ISDA is subject to English law, the English Court shall have exclusive jurisdiction to determine the dispute where claims are brought within “Contracting States”, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982. At the time the 1992 ISDA Master Agreement was first released (in January 1993), if a counterparty sought to bring a claim in a Greek Court under the 1992 ISDA, the Greek Court would have been required to have declined jurisdiction on the basis that Greece was a Contracting State and therefore the English Court had exclusive jurisdiction.
However, the definition of what constitutes a Contracting State has changed over time. It would appear that Greece does not now constitute a Contracting State, as defined. This means that, in the event that a counterparty to a 1992 ISDA now seeks to bring a claim in the Greek Court, it is not certain that the Greek Court would determine that the English Court had exclusive jurisdiction. Factors to be considered are likely to include whether Greece was a Contracting State at the date the ISDA was entered into, or at the date of any ISDA re-papering, or at the date a claim is issued.
Where a dispute develops over a 1992 ISDA, but where a party wishes to have the claim heard in the English Court, parties may wish to consider issuing proceedings in the English Court, even on a declaratory basis, in order to avoid any the risk of proceedings being issued before the Greek Court.
Where disputes develop between parties who have entered into an agreement pursuant to the 2002 ISDA Master Agreement, the English Court will have exclusive jurisdiction if claims are brought in “Convention Courts”, being Courts which are bound by the 1968 Brussels Convention and the 1998 Lugano Convention. Again, the countries which are bound by these Conventions has changed over time and, whilst it is open to interpretation, it is likely that the Greek Court does not constitute a Convention Court under the 2002 ISDA Master Agreement and it is therefore likely that the English Court would have non-exclusive jurisdiction over a dispute arising under the 2002 ISDA.
Given the uncertainties, where there is a dispute, parties to the 2002 ISDA may wish to issue proceedings sooner rather than later, in order to seize the English Court’s jurisdiction and avoid the risk of the Greek Court taking jurisdiction.