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Credit Suisse v Stichting Vestia (2014) – Conflicts over capacity reach Rotterdam

Credit Suisse International v Stichting Vestia Groep [2014] EWHC 3103 (Comm)


Credit Suisse International claimed approximately €83 million as an Early Termination Amount from Stichting Vestia Groep, a Dutch social housing association based in Rotterdam, as money due under an ISDA 2002 Master Agreement and CSA. The swap transactions were held as ultra vires, but Credit Suisse were allowed recovery of moneys.

The judgment can be found here.


Credit Suisse International (Credit Suisse) and Stichting Vestia Groep (Vestia) entered into a 2002 ISDA Master Agreement and Credit Support Annex on 9 November 2010. Between November 2010 and September 2011, 11 Transactions were entered into. Some were plain vanilla interest rate swaps for hedging purposes, whilst others consisted of Constant Maturity Swaps, swaptions and a Callable Range Accrual Swap.

Notably, there was an elaboration of the warranties in the Additional Representations in the Schedule to the Master Agreement, including:

“[Vestia] hereby represents and warrants to [Credit Suisse] (which representations will be deemed to be repeated by [Vestia] on each date on which a Transactions [sic] is entered into that:

(i) [Vestia’s] entry into and performance of its obligations under this Agreement and each Transaction hereunder is and will be in compliance with its articles of association (statuten), its financial rules (financieel statuut) and any other laws or regulations applicable to [Vestia] from time to time including, but not limited to, the [BBSH] (as the same may be amended, supplemented or replaced); and

(ii) [Vestia] is entering into each Transaction purely for the purpose of hedging its exposures and not for the purpose of speculation”.

These were referred to as the compliance and hedging provision respectively.

In June 2021, Credit Suisse closed out all of the Transactions under the ISDA Master Agreement after Vestia failed to meet a collateral call, which constituted an Event of Default. Credit Suisse then claimed an amount of €83,196,829 from Vestia as the Early Termination Amount. Vestia stated that there were five disputed contract groups in total, after Credit Suisse highlighted nine contracts in totality.

There were three preliminary issues that Vestia was disputing:

First Issue: Vestia did not have legal capacity to enter into the swap transactions.

Second Issue: the parties who entered into the transactions on behalf of Vestia lacked the authority to do so.

Third Issue: the termination notice sent by Credit Suisse was invalid as at the time of delivery, Vestia were not in default of contractual obligations.


First issue: Pursuant to the decision of the Court of Appeal in Haugesund Kommune v DEPFA ACS Bank [2010] EWCA Civ 579 (see our blog on the case), in which the capacity issues were to be determined by English common law rules, Smith J stated that the Rome Convention issues of capacity were not inside the present framework, and so issues of capacity were to be determined according to English common law rules. Vestia only had power to enter into transactions for hedging purposes only, and as some of the transactions were speculative, Vestia did not have capacity and so those specific transactions were therefore ultra vires and void.

Second Issue: the court heard that this issue was to be determined in reference to English law, so Credit Suisse would need to show sufficient evidence that the two persons who entered into the agreements on behalf of Vestia, had actual or ostensible authority. On the same basis as that of the first issue, the entry into the ultimately deemed void transactions were outside of the authority of the two applicable employees. Lord Templeman held that “if the disputed contracts were outside the capacity of Vestia, under English law, applying its private international law principles, the contracts would be considered to be void on the basis they were made without authority”, and both were not found to have held ostensible authority. However, Lord Templeman deviated from the decision made in Westdeutsche Landesbank Girozentrale v Islington LBC [1994] 4 All ER 890 (DRS blog), stating that whilst the transactions were void, the ISDA Master Agreement itself was not, as there was no reason as to why a legal entity could not enter into a valid contract, citing the hedging provision.

Third Issue: the judge ultimately rejected both of the main arguments surrounding the third issue, stating that they were not sufficient enough to be able to constitute as an invalid notice.

Credit Suisse’s early termination notice was allowed under the Master Agreement, with the amount being determined by the determination of the issues, to be done so separately alongside calculation of the Early Termination Amount.


This case helped determine the effect of contractual representations that made a contract ultra vires and void. Following precedent, local authorities or (as in this case) social housing associations have the capacity to enter into basic interest rate swap transactions for hedging purposes, but cannot enter into more complex transactions as pure speculation.

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