Defendant Urbi Desarrollos Urbanos, S.A.B. de C.V. (Urbi) moves to dismiss the Complaint for lack of personal jurisdiction. Defendant's motion is denied for the reasons that follow.

Factual Background & Procedural History

Plaintiff Barclays Bank México, S.A., Institución de Banca Múltiple, Grupo Financiero Barclays México (Barclays) is a Mexican financial institution. Urbi is a Mexican housing development company. Between December 2010 and February 2013, Barclays and Urbi entered into several derivatives transactions. Since the instant motion only deals with jurisdictional issues, not the merits, the court will not discuss the details of the subject transactions or provide background on how they operate beyond that which is necessary for the purposes of this decision.

On December 14, 2010, the parties executed the standard agreement that governs derivatives transactions: the 1992 ISDA Master Agreement (the Master Agreement), which, pursuant to usual custom and practice, includes and incorporates a Schedule (the Schedule) and Credit Support Annex (the Annex). Pursuant to Section 1(c) of the Master Agreement, the Master Agreement, the Schedule, the Annex, and any subsequent Confirmations (discussed below) collectively constitute "a single agreement" that governs all relevant transactions between the parties. Further, Section 13 of the Master Agreement, as amended by Part 5(i) of the Schedule, provides:

Governing Law. This Agreement will be governed by and construed in accordance with the law specified in the Schedule.

Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement [*2]("Proceedings"), each party irrevocably:

Submits to the jurisdiction of the English courts if this Agreement is expressed to be governed by English law, or to the exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City, if this agreement is expressed to be governed by the laws of the State of New York and each party hereby irrevocably waives any rights to any other jurisdictions to which it may be entitled on account of place of residence or domicile.

The Schedule provides that New York law governs the parties' agreement.

On February 9 and October 5, 2012, Barclays sent Urbi written confirmations (the Confirmations) of trades that Urbi requested to be executed pursuant to the Master Agreement. The Confirmations stated that each

supplements, forms a part of, and is subject to the [Master Agreement]. All provisions of the [Master Agreement] shall govern this Confirmation except as expressly modified below. In the event of any inconsistency between the provisions of the [Master Agreement] and this Confirmation, this Confirmation will prevail for the purposes of the Transactions [defined as the trades specified in each of the Confirmations].

The Confirmations then list all of the pertinent details of the trades, including the trade date, the option style, and the strike rate. The Confirmations contain the following designation: "Governing Law: English." As a result of this designation, defendant contends that this action should have been brought in England and is governed by English law.

Finally, pursuant to the Master Agreement, when certain contractually defined events occur, a party entering into derivatives transactions with the bank is required to send the bank collateral. The failure to do so gives the bank the option to terminate the Master Agreement and force the investor to settle up — that is, pay for the losses on its trades. The Complaint alleges that Urbi was required to post collateral on three separate occasions in January 2013. Urbi did not do so. Consequently, Barclays terminated the Master Agreement, pursuant to its terms, as of February 11, 2013. On April 5, 2013, Barclays commenced this action to recover losses it allegedly suffered from the transactions with Urbi, which purportedly exceed $11 million.

Discussion

On this motion, Urbi does not challenge the allegations in the Complaint. Rather, Urbi merely seeks dismissal on the ground that the terms of Confirmations, which call for the application of English law, preclude Barclays from suing in this court. Other than the contract, there is no other basis to assert personal jurisdiction over Urbi, which lacks any nexus to New York apart from wire transfers to a New York bank that are an insufficient basis for jurisdiction under CPLR 301 or 302. See Pramer S.C.A. v Abaplus Int'l Corp., 76 AD3d 89, 96 (1st Dept 2010) ("the mere payment into a New York account does not alone provide a basis for New York jurisdiction ... especially when all aspects of the transaction occur out of state."). Moreover, even if the CPLR provided for jurisdiction, due process principles would preclude this court from asserting jurisdiction over Urbi because it has not availed itself of this jurisdiction nor should it expect to defend its actions in this court if the Master Agreement is governed by [*3]English law. See Black River Assocs. v Newman, 218 AD2d 273, 278 (4th Dept 1996), accord McGee v Int'l Life Ins. Co., 355 US 220 (1957). The parties, which are Mexican companies, clearly sought to avail themselves of a single foreign jurisdiction, either England or New York, not both. Absent an independent nexus to New York, due process would be violated if this court contravened that choice.

Therefore, the court must determine what the Confirmations mean when they state that "[i]n the event of any inconsistency between the provisions of the [Master Agreement] and this Confirmation, this Confirmation will prevail for the purposes of the Transactions." As this jurisdictional inquiry is nothing more than an exercise in contract interpretation, this court's "function is to give effect to the parties' intentions." Greenwich Village Assocs. v Salle, 110 AD2d 111, 114 (1st Dept 1985), citing Mallad Const. Corp. v County Fed. Sav. & Loan Ass'n, 32 NY2d 285 (1973). The court recognizes that "[c]ontracts are made by people about real transactions and they should be interpreted in accordance with their reasonable intentions at the time." Greenwich Village, supra, quoting Herbert Rosenthal Jewelry Corp. v St. Paul Fire & Marine Ins. Co., 21 AD2d 160, 167 (1st Dept 1964). "Thus, when the literal meaning of contract language cannot reasonably have reflected the parties' contemplation, the language must be given its reasonable, rather than literal application." Greenwich Village, supra, citing City of Buffalo v Strong & Co., 304 NY 132 (1952). To determine which interpretation to adopt, the court must look at the reality of the relationship between the parties and the nature of the transactions to determine the parties' intent. Greenwich Village, 110 AD2d at 114 (rejecting "an interpretation which, although embraced within its literal meaning, nevertheless is contrary to common sense and the realities of the situation.").

Urbi suggests that the Confirmation's clause regarding English law should be interpreted broadly. Moreover, it looks to the language stating that conflicts between the Confirmations and the Master Agreement are to be resolved in the formers' favor, and contends that English law and jurisdiction apply.

In contrast, Barclays proffers a more narrow reading. Barclay contends all that is governed by English law are issues arising from the specific trades listed in the Confirmations. For instance, had Barclays been negligent with the execution of the trades, causing a loss by failing to ensure that their timing and pricing adhered to the Confirmations' specifications, Urbi's remedy would be governed by English law. So, for instance, if the regulations of the Financial Services Authority (the FSA, England's securities regulator) provide for a different remedy than the SEC, the FSA's regulations would govern. However, Barclays avers, Urbi's alleged breach was its failure to post collateral, an obligation set forth in the Master Agreement, and one does not need to look to the Confirmations to determine if and how Urbi committed such a breach. In sum, Barclays contends, Urbi's failure to post collateral has nothing to do with "the Transactions" in the Confirmations.^[FN1]

Barclays is correct that the determination of whether Urbi committed a breach is made by [*4]looking at its obligations in the Master Agreement. Nonetheless, no breach can be fully articulated without reference to the Confirmations. The Master Agreement alone cannot shed light on whether Urbi had an obligation to post collateral because the Master Agreement does not contain a list of Urbi's trades. Hence, the Master Agreement provides that it is part of "a single agreement."

Most compelling to the court is the parties' competing descriptions of which contract is alleged to have been breached. Barclays claims that Urbi breached the Master Agreement, and Urbi maintains that the only contract that could have been breached is the "single agreement." No one, at least not seriously, can contend that the Confirmations were breached. In truth, it is not even clear what a breach of the Confirmations would consist of other than a failure to execute the specified trades. Indeed, the Confirmations appear to be nothing more than receipts that memorialize the trades that were executed under the parameters of the Master Agreement. While, for the purposes of the specified trades, the terms of the Confirmations govern, including the selection of English law, it strains credulity to believe that the reference to English law in a receipt was intended to amend the heavily negotiated Master Agreement.

Further, some indication of the parties intent is contained in the default and termination letters sent by Barclays to Urbi, dated January 14, 2013, February 5, 2013, and February 8, 2013, which each state that they are governed by New York law. These letters are not contracts and pre-date this controversy. One would presume that any law mentioned would be the law that the parties understood to govern their underlying "single agreement." The fact that Barclays indicated in these letters that New York law applies (before there was controversy between the parties on this issue) suggests that it was understood that the Master Agreement is governed by New York law.

The disagreement over which contract was breached is more rhetorical than real. There is only one agreement between the parties: the Master Agreement. All of the other written documents — the Schedule, the Annex, and the Confirmations — are part of it. The Master Agreement is a template that all derivatives contracts are based on. The reason that there is only a single agreement is that the other documents either fill in the blanks or tweak the default terms of the Master Agreement to fit the specific needs of the parties' relationship. When the Master Agreement was originally executed in December 2010, the parties made a clear choice of law: New York. At no point in their subsequent dealings did the parties ever make such an unambiguous decision that evidences their intent to be bound by a different jurisdiction. Neither party nor their attorneys have any definitive idea why English law was referenced in the Confirmations. Barclays contends that it was a mistake, which is a plausible guess, but nothing more. Urbi seeks to hold Barclays to that purported mistake, yet does not proffer a good reason either (1) why the parties decided to change their choice of law over a year into their relationship in such a haphazard way that appears to contravene their clear intentions in the Schedule; or (2) why Urbi did not object to Barclays' reference to New York law in its default letters, which represents either a third ^[FN2] designation of law or a reaffirmation of their original choice of law from 2010.

When the parties actually engaged in meaningful negotiations over where this lawsuit should be venued, they specifically picked this court. Ultimately, the parties' intent governs the court's interpretation of their agreement. Accordingly, it is [*5]

ORDERED that the motion to dismiss the Complaint by defendant Urbi Desarrollos Urbanos, S.A.B. de C.V. is denied; and it is further

ORDERED that the parties are to appear in Part 54, Supreme Court, New York County, 60 Centre Street, Room 228, New York, NY, for a status conference on August 13, 2013 at 10:30 in the forenoon.

Dated: July 15, 2013ENTER:

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J.S.C.