Portugal’s Finance Minister, Maria Luís Albuquerque, agreed to litigate with Banco Santander Totta in a British court, saying at the time that Portuguese courts had no jurisdiction.
The High Court of Lisbon has decided otherwise in relation to another case and the inference in today’s news is that a Portuguese court would be more sympathetic to the government, and hence the taxpayer who has been saddled with escalating loan service costs for Portugal’s nationally owned companies that signed toxic Swaps contracts.
The Lisbon Court of Appeal annulled a clause in a Swaps contract between a Portuguese company and Barclays which had claimed that only the British courts were competent to adjudicate on the dispute between the parties.
The ‘British courts only’ clause is present in several existing Swaps contracts between state enterprises and Banco Santander Totta which between them show losses to date of €1.2 billion. However, the Government did not even try to have these cases judged in Portugal, accepting the British courts’ jurisdiction.
The case decided in Lisbon on April 11th this year concerns a dispute between the Sweetbusiness and Barclays.
The company challenged clause in its €1 million Swaps contract, which stated the British courts would be used to resolve conflicts. Lawyers for Sweetbusiness successfully argued that the clause violated a European Regulation, the law of ‘General Contractual Clauses’ and that such a contractual provision "violated the most elementary good faith in negotiations."
Albuquerque has been successful in clearing up the Swaps mess that many infer she was partly involved in creating. All banks that has existing Swaps contracts with Portugal's publically-owned companies have been paid off early, with the notable exception of Santander which has refused to accept early settlement and is in danger of being further shunned by a government that may be at the helm of Portugal's resurgence and organising its financial needs.
