On 4 March 2016, the High Court[1] rendered judgment on the first case tried under the Financial List, a special process introduced in the United Kingdom to handle complex claims related to financial markets.

In order to be included on the list and be heard by specialist judges, a claim must be for at least £50 million, demand financial expertise, or raise issues of general importance to the financial markets.

Banco Santander Totta S.A. (“Santander Portugal”) sought a declaration that obligations under nine long-term swaps were legal, valid, binding and enforceable in accordance with their respective terms. As of 1 October 2015, the unpaid amount was calculated at €272,561,157; the estimated liability up to maturity was estimated at €1.3 billion.

Four public sector Portuguese transport companies, Companhia de Carris de Ferro de Lisboa, S.A. (“Carris”), Sociedade Transportes Colectivos do Porto S.A. (“STCP”), Metropolitano de Lisboa EPE (“MdL”) and Metro do Porto SA (“MdP”) (collectively, the “Transport Companies”) ceased payments under the swaps in September 2013.

Part of the defence advanced by the Transport Companies to void the swaps depended on the application of mandatory rules of Portuguese law to 1992 ISDA Master Agreements expressly governed by English law.

The Court found in favour of Santander Portugal, declined the application of mandatory rules of Portugal and warned that “[…] any other conclusion, the court believes, would undermine legal certainty.”

This is a direct reference to the recent decision in Dexia v Comune di Prato[2] – pre-Financial List – where Italian public authorities successfully voided an English law ISDA Master Agreement due to a breach of mandatory rules of Italy.

The Court of Appeal is expected to have its say on mandatory rules as both the decision in the present case and the one in Dexia are under appeal. In the meanwhile, the tone of the Financial List is set: legal certainty shall prevail.

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