Local Authority Had Capacity To Enter Swaps, But "Jurisprudential Jeopardy" Remains

The Court of Appeal (CoA) has unanimously allowed the appeal of Banca Intesa Sanpaolo Spa and Dexia Credit Local SA (the Banks) in Banca Intesa Sanpaolo Spa and another v Comune di Venezia [2023] EWCA Civ 1482.

This decision overturns the high profile ruling from the Commercial Court in autumn 2022 which we discussed previously.

The Commercial Court concluded that Venice did not, as a matter of Italian law, have capacity to enter into the swaps at the heart of the case. The CoA has overturned that decision, concluding that Venice did in fact have such capacity.

However, the CoA declined permission to appeal on the question whether application of the Italian Supreme Court's 2020 Cattolica ruling¹ to events in 2007 was wrong on the basis that it constituted a retrospective change of law. This leaves in place the rather unpalatable risk of future changes in foreign law undermining past English law obligations. It is therefore welcome that the CoA agreed that the