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Depfa, Pisa Swaps Feud Needs Trial in Italy and U.K., Judge Says

A London judge ruled that a dispute between Depfa Bank PLC, Dexia SA and the Italian province of Pisa over a swaps deal needs separate trials in Italy and the U.K.

While the banks had asked the judge to refer the case to a European Court for a final ruling on jurisdiction, Judge Nigel Teare refused the request, saying proceedings in the two countries were different.

The case is one of several being fought over derivatives used to hedge interest rates sold to European regional governments by investment banks that turned out to be far more costly than predicted.

Dexia and Depfa filed a lawsuit in London in 2009 seeking a ruling that the swaps are valid. Pisa wants an Italian court to approve its decision to annul them, according to Teare’s judgment.

“The proceedings are different and the administrative matters must be heard in Italy,” Pisa lawyer Germana Lo Iacono-Smith said in a phone interview.

Benoit Gausseron at Dexia in Paris didn’t immediately respond to a phonecall requesting comment. A call to the press room of Hypo Real Estate Holding AG, Depfa’s parent company, wasn’t answered.

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