Significant Victory for Dexia Crediop in London Court of Appeal

Cleary Gottlieb has successfully represented Italian bank client Dexia Crediop in the Court of Appeal in London. The win marks the conclusion of a long-running dispute between Dexia and a major Italian public authority, the regional government of Piedmont.

Cleary Gottlieb’s victory for Dexia is the latest in a series of UK banking litigation wins for the firm. Cleary Gottlieb has won its last six court battles for clients including BNP Paribas, Dexia, Intessa Sanpaolo, National Bank of Abu Dhabi and Vnesheconombank.

Dexia Crediop originally entered into derivative swap contracts with the Italian region of Piedmont in 2006. However, the regional government went on to challenge and purportedly annul the contracts, arguing that it lacked capacity to enter into the swap contracts, that the agreements were not valid under Italian law and contained hidden profits for the bank.

With a decision published on October 9, 2014, the Court of Appeal rejected Piedmont’s arguments and upheld two previous London High Court of Justice decisions in July 2012 and July 2013 that recognized the full validity and enforceability of the contracts, ruling that Piedmont must pay all outstanding back payments as well as future sums due to Dexia Crediop, totaling over €50 million, and cover Dexia’s court costs and interest accrued.

Significantly, this is the first case in a spate of English court cases to reach the Court of Appeal concerning derivative transactions entered into between banks and Italian municipalities, and the Court’s conclusions in this case will be an important reference point for other litigation cases of this nature.