Skip Repeated Content


Additional representations in an ISDA Master Agreement were held to be enforceable warranties.

Credit Suisse International v Stichting Vestia Groep

Additional representations in an ISDA Master Agreement were held to be enforceable warranties.


Between November 2010 and September 2011, Credit Suisse International ('CS') entered into a number of transactions with a Dutch social housing association, Stichting Vestia Groep ('SVG'), under a 2002 ISDA Master Agreement (the “Master Agreement”) with a Credit Support Annex ('CSA').  CS terminated the Master Agreement in June 2012 on the grounds that SVG failed to provide collateral under the CSA and claimed an early termination amount.  SVG disputed the claim and contended, amongst other things, that some of the transactions under the Master Agreement (the 'Disputed Transactions') were not binding on them because they were outside their objects and so they lacked capacity to enter into them.


The court ruled that the private international law principles governing issues of legal capacity, being outside the scope of the Rome Convention, were governed by common law.  The question of SVG’s capacity to enter into the disputed transactions was a matter of Dutch law, being the law of SVG’s place of incorporation, but the legal consequences of any lack of capacity were a matter for English law under the Master Agreement.

The court found that SVG did not have capacity to enter into the Disputed Transactions under either its articles of association or Dutch law and so they were ultra vires.

The court confirmed the general rule of English common law that legal entities are not bound by contracts outside their capacity.  However, the Master Agreement contained additional repeating representations given by SVG confirming that “on each date on which a Transactions [sic] is entered into…. entry into and performance of its obligations … will be in compliance with its articles of association … its financial rules … and any other laws or regulations applicable”.

The court found that the parties intended the additional representations to take effect as warranties that any future transactions made under the Master Agreement would be in accordance with their articles of association and should not be vitiated because of limitations in SVG’s articles of association or any applicable laws or regulations. These additional representations meant that the fact that the disputed transactions were ultra vires and invalid did not affect CS’s rights or SVG’s obligations under the Master Agreement. CS was,  therefore, entitled to recover what would have been the early termination amount or damages in that amount.

Tariq Rasheed says:

"On the face of it, this case is an interesting example of an entity expanding its own capacity by estoppel or contract. However, the court rebutted this interpretation. “I readily accept that an entity cannot achieve what it has no power to do simply by stating or promising that it has the power, and that underlying the doctrine of ultra vires is a policy of protecting the public. But there seems to me no reason that a legal entity should not in a valid contract undertake that the contract will not be used as a vehicle for purported transactions that are invalid because they are outside their capacity”."

At the time of publication, an appeal is outstanding.

This document provides a general summary and is for information/educational purposes only. It is not intended to be comprehensive, nor does it constitute legal advice. Specific legal advice should always be sought before taking or refraining from taking any action.