The Court of Appeal of London issued a fundamental decision in a derivative dispute between an Italian bank and an Italian local authority.

The decision was issued in the context of the Dexia/City of Prato proceedings and partially reformed the previous High Court decision on the matter. The Court of Appeal confirmed the full validity of the derivative contract under an ISDA agreement between the parties.

In doing so, the Court of Appeal discusses one of the more significant issues tipically debated in the disputes between international banks and Italian counterparties, such as the relevance of the initial mark to market, the economic convenience of the transaction and the supposed requirements to insert in the contract certain consumer protection clauses.

As a consequence the judgment may represent a point of reference for all pending and future disputes.