A narrow interpretation

The ECJ's rejection of a derivatives counterparty's ultra vires argument provides clarification for future cases Since the collapse of several large financial institutions from 2008 onward, derivative counterparties have attempted to challenge a derivative contract and avoid losses by arguing the contract is ultra vires because the counterparty did not have legal capacity to enter the contract in the first place. By raising this argument, foreign counterparties to an English law-governed derivative contract have also sought to invoke an EU regulation challenging the jurisdiction clause and seeking to have the proceedings heard in its home jurisdiction potentially on more favourable terms.