[2025] EWHC 1368 (Comm)

Fecha: 05-Jun-2025

The Client Agreement

The Client Agreement

24.

On 11 March 2021, JPMS plc (formerly J.P. Morgan Securities Ltd) and VTB entered into a contract by which JPMS plc opened a futures and options account for the execution and/or clearing of exchange listed or over-the-counter clearing products in the name of VTB (“the Client Agreement”).

25.

The second recital provides:

“Where the Client has entered into Terms of Business with JPMSL, this Agreement, rather than the Terms of Business, shall govern the Client’s relationship with JPMSL for the execution and/or clearing of exchange listed or OTC cleared products and options accounts at JPMSL. However, the Terms of Business shall continue to govern all other investment business with JPMSL as defined by FSMA. In the event of any conflict between the clauses of this Agreement and the Terms of Business, the clauses of this Agreement shall prevail. This is a ‘Specific Product Contract’ for the purposes of the Terms of Business”.

26.

The Client Agreement includes a definition of “Affiliate” which is used in various provisions, none of them concerned with dispute resolution.

27.

Clause 10 provides that money received from VTB or held on it behalf is to be treated as “Client Money”, and includes provisions determining when Client Money is to be released to VTB. Clause 13 gives JPMS plc a right to transfer Client Money and other property between VTB accounts with JPMS plc or its affiliates.

28.

Under clause 21, following an Event of Default, JPMS plc is entitled to liquidate VTB’s positions or transactions, and to arrive at a “single sum” payable to one or other party; to set off the amount of VTB’s deposits against any indebtedness of VTB to JPMS plc; and to retain amounts payable “for such period as is commercially reasonable” for JPMS plc to perform certain activities.

29.

Clause 24 excuses JPMS plc when it is unable to perform “by reason of any cause beyond [its] reasonable control” including, without limitation, “acts or regulations of any governmental or supra national bodies or authorities”.

30.

Clause 31 provides for the application of English law and that:

“The parties to this Agreement agree that any dispute arising out of or connected with this Agreement including a dispute as to the validity or existence of this Agreement and/or this clause or any non-contractual obligations arising out of or relating to this Agreement shall be resolved in accordance with the Rules of the London Court of International Arbitration … The Arbitration Rules are deemed to be incorporated by reference into this clause”

(“the CA Arbitration Agreement”).

31.

Rather curiously, clause 33 provides for the service of a notice electing to resolve a dispute “by arbitration and not litigation”, stating that if the party in receipt of such a notice objects, “the Dispute shall be referred to the courts of England pursuant to clause 31 but otherwise the dispute shall be referred to arbitration under the Rules of the London Court of International Arbitration”. Mr Fenwick KC faintly argued that the result was that there was no binding arbitration agreement in the Client Agreement, while recognising that this would not take his client very far because its inevitable consequence was that there was an exclusive jurisdiction agreement in favour of the English courts.

32.

In any event, I am persuaded that there is nothing in the point:

The terms of clause 31 are clear and mandatory.

ii)

Clause 33 does not contain a general right to opt to refer a dispute to court, only a right to do so “pursuant to clause 31”. As there is no such right, this goes nowhere.

iii)

The extensive overlap between clauses 31 and 33, the “misdirection” to clause 31 in clause 33, and the fact that it is clear from the 2011 Terms (see [42] below) that JPM at one time adopted English court jurisdiction as its preferred choice of forum, make it clear that clause 33 is legacy drafting, and reflects an error in the drafting process. This is one of those cases where the court is driven to the conclusion that “something must have gone wrong with the language” (Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101, [14]-[15]). There is other evidence indicative of drafts having been unhappily combined (for example the overlap and inconsistency between clauses 35 and 36), providing reason to suppose a Malapropian drafting influence (Scottish Power UK plc v BP Exploration Operating Company Limited [2005] EWHC 2658 (Comm), [80]).

iv)

Clause 33 has not been engaged in any event, because there has been no attempt by either party to refer a dispute to arbitration. These proceedings are concerned with alleged breaches of the negative covenant in clause 31 not to pursue proceedings elsewhere than in the permitted forum.

33.

Clause 35 provides that the agreement is “for the benefit of and binding upon the Parties both and the Parties respective successors and assigns” and that “a person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999”.

34.

Clause 37, addressing termination, provides that “notwithstanding any notice of termination, all the rights and obligations of the parties hereunder shall remain in full force and effect until such liquidation or transfer of open positions and return of all such Property”.