Italian Banks Successful before the London High Court of Justice

Cleary Gottlieb successfully represented Dexia Crediop S.p.A. and Intesa Sanpaolo S.p.A. in proceedings brought against the Italian region of Piedmont before the London High Court of Justice concerning derivative transactions entered into by the two Italian banks and the region of Piedmont.

The Italian regional authority signed the swaps along with a €1.8 billion bond issue in 2006. The current regional government purportedly annulled the interest-rate swap contracts, arguing that the agreements were not valid under Italian law and contained hidden profits for the banks.

With a decision published on July 16, 2013, the judge rejected all of Piedmont’s arguments, and confirmed that the derivative transactions entered into by the two Italian banks and Piedmont are fully valid and enforceable, ruling that the regional authority must pay €36 million to Dexia Crediop and Intesa Sanpaolo. The High Court dismissed the region’s allegations of hidden profits and mis-selling as “vague and obscure”, as well as “without any proper basis”.

The decision affirmed an earlier judgment issued by the High Court last year, and marks another significant step in the broader dispute against Piedmont’s decision to challenge and annul, by way of self-redress resolutions, the decisions and agreements relating to derivative transactions entered into by the previous regional government.