On the heels of the Italian Supreme Court’s well-known Cattolica decision of May 2020, a new chapter has been written in the long-running legal debate over certain derivative contracts entered into by a small local authority in Italy.

This time, the High Court of Justice of England and Wales has weighed in on the issue, with a judgment that lays down clear, precise principles that will shape the caselaw for years to come.

What principles has the High Court laid down? And what criteria should be assessed to ensure the validity of derivative contracts with a local authority as a counterparty?

Our Debt Capital Markets Focus Team breaks down the High Court’s recent judgment here.