With a default judgment handed down in favour of Dexia Crediop on June 17, 2016, the High Court of Justice of London, Queen’s Bench division, Commercial Court declared that the interest rate swap agreements between Dexia Crediop and Città Metropolitana di Milano “are and have been at all material times legal, valid and binding operations enforceable in accordance with their respective terms.” The decision was fully in favor of the claimant, Dexia Crediop, while Città Metropolitana di Milano was ordered to pay Dexia Crediop’s costs of the claim.
Dexia Crediop originally entered into derivative swap contracts with the Province of Milan in 2002, which were later assigned to Città Metropolitana di Milano. The local authority started challenging the contracts in 2015, arguing that they contained hidden profits for the bank.
The decision established, however, that the agreements “were entered into for the purposes of managing the Defendant’s borrowings or investments and not for the purposes of speculation,” and that Dexia Crediop “has not caused and/or is not liable to the Defendant in respect of any loss or damage.”