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2020 | OriginalPaper | Chapter

United Kingdom: Giving Effect to Optional Choice of Court Agreements—Interpretation, Operation and Enforcement

Authors : Louise Merrett, Janeen Carruthers

Published in: Optional Choice of Court Agreements in Private International Law

Publisher: Springer International Publishing

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Abstract

This chapter begins by explaining that respect for party autonomy is an important feature of the national common law rules and the European rules which together govern jurisdiction and choice of law in civil and commercial matters in the UK. The chapter considers the approach to optional jurisdiction agreements in the four main regimes which apply to determine jurisdiction: the BIR recast, the Hague Convention, the Lugano II Convention and the residual national rules. The chapter explains how the various regimes distinguish between exclusive and non-exclusive agreements. At common law, the starting point is to construe the express and implied positive and negative promises contained in the choice of court agreement. The key difference between exclusive and non-exclusive agreements is that while both contain a positive promise to submit to the jurisdiction of the chosen court, only an exclusive agreement also contains a negative promise not to sue anywhere else. When it comes to the effect of those promises, the unique feature of the English national rules (which are broadly mirrored by the Scottish national rules) is that jurisdiction is always discretionary. However, because of the respect for party autonomy, the courts will give effect to the promise to submit in a non-exclusive agreement unless there is a strong reason for not doing so. By contrast, it is only in the case of an exclusive agreement that suing in another jurisdiction amounts to a breach of contract. This means that remedies founded on breach of contract, including damages, anti-suit injunctions, and defences to the enforcement of judgments, should be available only where there is an exclusive jurisdiction agreement. The chapter also considers asymmetric agreements, which are usually optional in respect of one party, but exclusive in relation to another. Finally, the authors outline the potential impact of Brexit and possible ways forward.

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previous chapter Turkey: Optional Choice of Court Agreements

next chapter United States: The Interpretation and Effect of Permissive Forum Selection Clauses

See e.g. Recital (19) to Regulation (EC) No 1215/21012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial cases (the “BIR recast”): “The autonomy of the parties to a contract, other than an insurance, consumer or employment contract, where only limited autonomy to determine the courts having jurisdiction is allowed, should be respected subject to the exclusive grounds of jurisdiction laid down in this Regulation”. See also, in the context of choice of law, Regulation (EC) No 593/2008 on the law applicable to contractual obligations (“RIR”), Recital (11) “The parties’ freedom to choose the applicable law should be one of the cornerstones of the system of conflict-of-law rules in matters of contractual obligation”.

Fentiman (2015), para 1.38.

Rogerson (2013), p. 179.

Schedule 8 takes effect subject to Brussels I Recast, the Lugano II Convention, and Schedule 4 of the 1982 Act (the “Modified Convention”, which allocates jurisdiction within the UK).

Scottish Committee on Jurisdiction and Enforcement, Report of the Scottish Committee on Jurisdiction and Enforcement (HMSO, 1980) (‘Maxwell Report’).

Maxwell Report, paras 2(16)(h), 2.23, and 2.24. Crawford and Carruthers (2015), para 7-78.

e.g. Sch 8 r 2(b) (special jurisdiction in matters relating to a contract).

Dicey, Morris &Collins (2012), Rule 39.

[1981] 2 Lloyd’s Rep 119.

[1984] 2 Lloyd’s Rep 142, 154.

[2001] UKHL 64 at [24].

The position in relation to intra-UK disputes is discussed in Sect. 2.6 below.

The BIR recast applies where proceedings are commenced on or after 10 January 2015 replacing the BIR and the Brussels Convention. A parallel scheme applies as between Denmark (which is not bound directly by the BIR recast) and the other Member States, including the UK.

Cf. Lugano II Convention, Art 23, which applies if one or more of the contracting parties is domiciled in a Lugano-Contracting State (Art 23.1).

Subject to Art 23.3 which provided: where such an agreement is concluded by parties, none of whom is domiciled in a Member State, the courts of other Member States shall have no jurisdiction over their disputes unless the court or courts chosen have declined jurisdiction.

Which include Mexico, Montenegro, Singapore and Denmark. The People’s Republic of China, the Ukraine and the USA have signed, but not yet ratified, the Convention.

Article 26(6) provides “This Convention shall not affect the application of the rules of a Regional Economic Integration Organization that is a Party to this Convention, whether adopted before or after this Convention (a) where none of the parties is resident in a Contracting State that is not a Member State of the Regional Economic Integration organization; (b) as concerns the recognition or enforcement of judgments as between member States of the Regional Economic Integration Organization.”

Decision 2007/712/EC on the signing, on behalf of the Community, of the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2007] OJ L339/1; and Decision 2009/430/EC concerning the conclusion of the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2009] OJ L147/1. See Civil Jurisdiction and Judgment Act 1982, as amended by the Civil Jurisdiction and Judgments Regulations 2009 (SI 2009/3131).

Confirmed at common law by Fiona Trust & Holding Corp v Privalov [2007] UKHL 40 and, under the BIR, by Benincasa v Dentalkit srl Case C-269/95 and now by Art 25.5 of the recast Regulation. See, for Scotland, Belgian International Insurance v McNicoll 1999 GWD 22-1065, reversing single judge decision reported at 1999 GWD 13-622.

Dicey, Morris &Collins (2012), para 12-105: “It is a question of interpretation, governed by the law applicable to the contract or, more accurately, the law governing the jurisdiction agreement, whether a jurisdiction clause is exclusive or non-exclusive”. See, in Scots law, Maher and Rodger (2010), para 17-17; and, by way of example, Breitenbucher v Wittke [2008] CSOH 145.

Regulation (EC) No 593/2008 on the law applicable to contractual obligations.

Provided the relevant contract was entered into after 17 December 2009 (Art 28 RIR). Although a European Regulation, the RIR applies in all cases before a UK court regardless of the domicile of the parties or any other connections to the EU and regardless of whether the law identified is the law of a Member State.

See Mauritius Commercial Bank v Hestia [2013] EWHC 1328 (Comm), [15] and [16].

[2013] EWHC 1328 (Comm).

Cf. recital (12), RIR, viz.: “An agreement between the parties to confer on one or more courts or tribunals of a Member State exclusive jurisdiction to determine disputes under the contract should be one of the factors to be taken into account in determining whether a choice of law has been clearly demonstrated.”

See Rogerson (2013), p. 180. Cf. Joseph (2015), para 6.21 “by itself, a non-exclusive jurisdiction agreement will only amount to a weak inference of choice of governing law”.

Because the doctrine of severability says that invalidity in the underlying agreement does not invalidate a choice of court agreement, those defences are likely to be limited: Fiona Trust& Holding Corp v Privalov [2007] UKHL 40.

Briggs (2008), para 1.17: “a contractual term which specifies the jurisdiction of a court … may be regarded as a part of procedural or public law, on the basis that whether a court has jurisdiction is always a matter of public law which lies beyond the control or autonomy of the parties”.

See Fentiman (2015), para 2.169: “jurisdiction agreements are severable from their host contracts, and have a procedural effect for jurisdictional purposes independent of their contractual effect between the parties”.

Powell Duffryn plc v Wolfgang Petereit Case C-214/89 and see Roche Products Ltd v Provimi [2003] All ER (Comm) 683. See also British Sugar plc v Fratelli Babbini [2005] 1 All ER 55, 72 para [40]: “the starting point, at any rate, in the process of construction, is to consider the meaning of the relevant clause under the law which is the proper law of the contract. In formulating its opinion in the terms that “the concept of ‘agreement conferring jurisdiction’ should not be interpreted simply as referring to the national law of one or other of the States concerned’, I do not think that the European Court of Justice was intending to indicate that those national laws should be excluded from consideration or that it was inappropriate to consider the proper law of the relevant agreement”.

Cf. Magnus and Mankowski (2016), p. 656, [143]: “it is submitted here that as far as possible an autonomous method of interpretation should be developed and applied. For this purpose any interpretation of a jurisdiction agreement should first make use of the rules enshrined in Art. 25 itself, namely, the wording of the jurisdiction clause as the starting point, the precedence of the parties’ intentions and the presumed exclusive effect of a jurisdiction agreement. … Only if the Regulation does not provide any assistance then in cases of doubt the interpretation rules of the law (including the conflicts rules) apply that governs the jurisdiction agreement. Insofar it is suggested here that the applicable law is to be determined in applying the provisions of the Rome I Regulation by analogy.”

See Joseph (2015), para 4.02; Magnus and Mankowski (2016), Art 25 [28] referring to a prorogation effect and a derogation effect. The same terminology is used in Dickinson and Lein (2015), para 9.06. Cf., in Scots law, Anton’s Private International Law (2011), para 8.131.

Effectively a unilateral submission in advance to the jurisdiction of the named court: Briggs (2012), pp. 378. Cf., in Scots law, Maher and Rodger (2010), para 17-17.

See Lord Mance in Hydropower v AES [2013] 2 Lloyd’s Rep 201 referring to the “negative promise” in an exclusive jurisdiction agreement.

A unilateral renunciation of jurisdiction which would otherwise have been found in other courts: Briggs (2012), p. 378.

For a detailed discussion see Keyes and Marshall (2015).

See e.g. Dicey, Morris &Collins (2012), para 12-102: a rigid division into exclusive and non-exclusive agreements may sometimes be misleading.

Or, as Keyes and Marshall prefer, “non-uniquely exclusive agreements.” (2015) pp. 355–356.

See Sabah Shipyard (Pakistan) Ltd v Islamic Republic of Pakistan [2003] 2 Lloyds Rep 511 and Joseph (2015), para 4.04.

BNP Paribas SA v Anchorage Capital Europe LLP [2013] EWHC 3073 (Comm) at [88] and Fentiman (2015), para 2.61.

[2009] EWHC 3069 (Comm).

Burton J at [17] said “this addition would seem only to make explicit what would, in any event, be implicit from the very fact that the chosen jurisdiction is not exclusive”.

See Rogerson (2013), p. 181.

[1993] 1 Lloyd’s Rep 368.

This presumption was applied in Sohio Supply Co v Gatoil [1989] 1 Lloyd’s Rep 580 and explained in Starlight Shipping Co v Allianz Marine & Aviation Versicherungs AG [2011] EWHC 3381 (Comm); at first instance (the first instance decision was reversed by the Court of Appeal but not on this point). Cf. Fentiman (2015), para 2.63: there are good reasons to agree even to a court’s optional jurisdiction when a court already has jurisdiction since it has contractual effects and may significantly affect the exercise of a court’s discretion to stay and once activated may become exclusive.

See Fentiman (2015), para 2.66. The question is whether the language used suggests anything about whether it is possible to imply a promise not to sue in any other jurisdiction.

[2013] EWHC 3073 (Comm) at [87] and [88].

See Continental Bank v Aeakos [1994] 1 WLR 588 applied in Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] CLC 579.

Briggs (2014), para 4.186.

F Garcimartín, ch 9 in Dickinson and Lein (2015), para 9.83.

Fentiman (2015), para 2.52.

Temporary presence is enough: Maharanee of Baroda v Wildenstein [1972] 2 QB 283. The methods of service are set out in the Civil Procedure Rules (CPR) r 6.9(2).

Under CPR rr 36 and 37.

CPR Practice Direction 6B 3.1(6)(d).

[1987] AC 460, 476–477.

[1987] AC 460, 480.

[2001] UKHL 64, [24].

See, for detail, Crawford and Carruthers (2015), paras 7-80 et seq.

On the Owusu point see e.g. Baatz and Sandiforth (2010); Skype Technologies SA v Joltid Ltd [2009] EWHC 2783 (Ch); [2011] I.L.Pr. 8 (Ch D); Equitas Ltd v Allstate Insurance Co [2008] EWHC 1671 (Comm); [2009] 1 All E.R. (Comm) 1137 (QBD (Comm)); Owusu v Jackson (t/a Villa Holidays Bal Inn Villas) (C-281/02) [2005] Q.B. 801; Times, March 9, 2005 (ECJ).

An analogy can be drawn with the general test for submission i.e. not doing anything which is inconsistent with disputing the court’s jurisdiction (Marc Rich & Co AG v Società Italiana Impianti PA (The Atlantic Emperor) (No 2) [1992] 1 Lloyd’s Rep 624).

See Donohue v Armco [2001] UKHL 64 (Sect. 2.3.1 above).

Although probably not an obligation to nominate an address for service because that is a slightly different point and sometimes addressed by an express clause.

[2002] EWCA Civ 1643.

See also Fentiman (2015), para 2.237: a non-exclusive jurisdiction agreement contains a contractual obligation to accept the jurisdiction of the agreed court if the other party elects to sue there and it is a breach of contract to prevent proceedings in the designated forum by seeking an anti-suit injunction in another court.

[1999] 2 All ER (Comm) 33, 40.

In Deutsche Bank v Sebastian Holdings [2009] EWHC 3069 (Comm), [14] Burton J referred to the fact that he had been provided with a positive bible of some 38 of the leading authorities.

[1993] 1 Lloyd’s Rep 368.

[1990] 2 QB 631, 646.

[1993] 1 Lloyd’s Rep 368, 376.

For example, Marubeni Hong Kong and South China Ltd v Mongolia [2002] All ER (Comm) 873 and Ace Insurance SA v Zurich Insurance Co Ltd [2001] EWCA Civ 173; [2001] 1 All ER (Comm) 802. See also, Dicey Morris &Collins (2012), para 12-106 Where the court finds that the agreement confers non-exclusive jurisdiction on the designated court (whether an English or a foreign court) it is more difficult to argue that the institution of proceedings is a breach of contract; and on that footing, an application for a stay of proceedings in favour of that foreign court will be determined on the basis of Spiliada. See also Rogerson (2013), p. 182: “By entering into even a non-exclusive jurisdiction agreement a party accepts that the chosen court is appropriate … That leaves rather little room for the party to argue that a court other than one identified in the jurisdiction agreement is a more appropriate court”.

[2009] EWCA Civ 725; [2010] 1 WLR 1023.

[2004] EWHC 211 (Ch), [27].

[2006] EWHC 47 (Comm).

The clause provided: “This agreement shall be governed by and construed in all respects in accordance with the Laws of England and each party hereunder submits to the non-exclusive jurisdiction of the English Courts”.

[2005] EWHC 2554 (Comm), [23]. The case actually involved the opposite situation, i.e. a non-exclusive jurisdiction clause in favour of the courts of Illinois.

[2009] EWCA Civ 725, [64].

See e.g. Antec v Biosafety discussed above.

Case C-116/02. The Lugano II Convention, not having been revised in light of BIR recast, does not contain any mechanism equivalent to Art 31.2.

See, e.g. Konkola Copper Mines Plc v Coromin Ltd [2006] EWCA Civ 5, per Rix LJ at [71]–[73]. Cf. Oceanfix International Ltd v AGIP Kazakhstan North Caspian Operating Co NV, 2009 G.W.D. 17-266; and see also Skype Technologies SA v Joltid Ltd [2009] EWHC 2783 (Ch); Equitas Ltd v Allstate Insurance Co [2009] Lloyd’s Rep. I.R. 227; and Jefferies International Ltd v Landesbanki Islands HF [2009] EWHC 894 (Comm).

Societe Financiere et Industrielle du Peloux v Axa Belgium [2006] QB 251 ECJ.

As defined in Directive 73/239/EEC on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance other than life insurance [1973] OJ L228/3, as amended.

See Fentiman (2015), para 2.249.

[2002] 1 Lloyd’s Rep 425 (HL).

[2013] UKSC 70.

[2005] 1 AC 101; [2004] 3 WLR 1193.

See Ahmed and Beaumont (2017).

Starlight Shipping Co v Allianz Marine and Aviation [2013] UKSC 70.

[2013] UKSC 70.

Lord Mance and Lord Neuberger took a different view in relation to the allegation that the claims had been settled.

[2013] UKSC 70, [39].

[2013] UKSC 70, [131]–[132].

In relation to damages the question arose as to whether, if the claimant could recover the sums awarded by Greek court, account had to be taken of the fact that if sued in England (in accordance with the EJA) might have still be ordered to pay damages. The Court of Appeal said that it did not need to take this into account [2014] EWCA Civ 1010, [20]: “It is suggested by the owners that any claim for damages is premised on the assumption that the Greek claims would have failed on the merits if they had been advanced in England. But, quite apart from the fact that Tomlinson J refused permission to advance the claims in England (with the result that they have failed in England), the owners’ breach of contract lies in the bringing of the claims. Whether they succeed in Greece or would have failed in England is irrelevant.”

[2015] EWHC 2857 (Comm).

[2016] EWCA Civ 1261 at [35].

There was discussion in the Court of Appeal judgment in Barclays Bank v Ente [2015] EWHC 2857 (Comm) (at [36]) of the fact that there were exchanges in AMT v Marzillier [2017] UKSC 13 which suggested that the Supreme Court would have made such a reference.

Gothaer v Samskip Case 456/11.

However, it may be difficult to say what loss has been caused in such a situation: see Fentiman (2015), para 2.269.

[2015] EWHC 2857 (Comm), [127]–[128]. The clause at issue provided: “… each of the parties irrevocably:

(a) agrees for [C’s] benefit that the courts of England shall have jurisdiction to settle any suit, action or other proceedings relating to this Agreement (‘Proceedings’) and irrevocably submits to the jurisdiction of such courts (provided that this shall not prevent us from bringing an action in the courts of any other jurisdiction); and

(b) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court and agrees not to claim that such Proceedings have been brought in an inconvenient forum or that such court does not have jurisdiction over it.”

Continental Bank v Aeakos [1994] 1 WLR 588.

100

[2017] UKSC 13.

101

This provides that “(1) The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so. (2) Any such order may be made either unconditionally or on such terms and conditions as the court thinks just”.

102

Castanho v Brown & Root [1981] AC 557, 573.

103

See Crawford and Carruthers (2015), paras 7-83 et seq.

104

Royal Bank of Canada v Cooperative Centrale Raiffeisen Borenleenbank BA [2004] EWCA Civ 7; [2004] 2 All ER (Comm) 847: Stricter rules apply to the grant of an anti-suit injunction: in Donohue v Armco, Lord Bingham stated: “I am mindful that the principles governing the grant of injunctions and stays are not the same [as those governing the grant of anti-suit injunctions]… . Considerations of comity arise in the one case but not in the other.”: [2001] UKHL 64 at [24].

105

See the passage from Donohue v Armco quoted in Sect. 2.3.1 above.

106

For example, in Dicey, Morris &Collins (2012), para 12-107, it is said: “It may be that, on its true construction, though the court was given non-exclusive jurisdiction, the parties agreed that if either were to invoke it, the other would submit to the jurisdiction of the named court for the sole determination of the dispute [emphasis added]. It would follow that proceedings taken in a foreign court would breach such a jurisdiction agreement if they sought to prevent the other party from invoking the jurisdiction agreement, or if they aimed to frustrate or prevent the other party having recourse to it.” See also Briggs (2014), para 4.423: “[I]f the court finds that the parties did not intend, or cannot have intended, that there should be parallel litigation in separate countries, this may encourage it to see the jurisdiction clause as exclusive. Another possibility is that the clause was non-exclusive until one party invoked it, rather as is the case with an option, which imposes no obligation until the party who is entitled to exercises the option”.

107

[2002] EWCA Civ 1643.

108

[2002] EWCA Civ 1643, [52].

109

[2004] EWCA Civ 7.

110

[2009] EWCA Civ 725.

111

[2009] EWCA Civ 725, [40].

112

[2009] EWCA Civ 725, [40].

113

[2009] EWCA Civ 725, [85] and [86] noting that “normally, a non-exclusive jurisdiction agreement will contemplate the possibility of simultaneous trials and if a trial is pursued abroad, there will not only be no breach of agreement but also no vexatious or oppressive conduct.”

114

[2003] EWHC 863 (Comm); [2003] 2 Lloyd’s Rep. 377.

115

[2003] EWHC 863 (Comm); [2003] 2 Lloyd’s Rep. 377, [112].

116

[2003] EWHC 863 (Comm); [2003] 2 Lloyd’s Rep. 377, [105]–[106].

117

[2015] EWHC 1571 (Comm); [2016] 1 All ER (Comm) 1144.

118

[2015] EWHC 1571 (Comm); [2016] 1 All ER (Comm) 1144, [37]–[38].

119

[2015] EWHC 3077. Andrew Smith J in SwissMarine Corporation Limited [2015] EWHC 1571 refused to apply the same reasoning.

120

[2015] EWHC 3077, [89].

121

[2015] EWHC 3077, [91]–[92].

122

[2015] EWHC 2690 (Comm), [53]. Although technically the decision could be said to be obiter as the judge had decided that the clause was an exclusive jurisdiction clause.

123

[2009] EWHC 3069 (Comm); [2010] 1 All E.R. (Comm) 808.

124

[2013] EWHC 2994.

125

[2005] 1 AC 101; [2004] 3 WLR 1193.

126

The Reciprocal Enforcement of Judgments (Administration of Justice) Act 1920 and the Foreign Judgments (Reciprocal Enforcement) Act 1933.

127

There is a similarly worded provision under the Foreign Judgments (Reciprocal Enforcement) Act 1933.

128

The Lugano II Convention applies in relation to judgments handed down by courts in EFTA states.

129

Fentiman (2015), para 18.84.

130

An obvious example might be where the parties have obtained judgment by ignoring an injunction against the continuing of proceedings as in Philip Alexander Securities and Futures Ltd v Bamberger [1997] IL Pr 72, where the court indicated that a judgment given in the face of an interlocutory injunction granted by the commercial court should not, as a matter of public policy, be recognised in the UK. But for the reasons explained in Sect. 2.5.4 above, given that it is no longer open to the court to grant an anti-suit injunction in these circumstances, it is unlikely that such a situation would arise in practice.

131

Civil Jurisdiction and Judgments Act 1982, s 1, as amended by Civil Jurisdiction and Judgments (Amendment) Regulations 2014 (SI 2014/2947), Sch 1, para 2.

132

e.g. for the provision of jurisdiction on the basis of the defendant’s domicile under art. 4 of BIR recast, the international allocation of jurisdiction per the regulation is satisfied by a finding that the defendant is domiciled in the UK. Thereafter, identification of the domicile of the defendant as, e.g. between Scotland, and England and Wales, is determined by Sch. 4: Daniel v Foster, 1989 SCLR 378.

133

See Jenic Properties Ltd v Andy Thornton Architectural Antiques 1992 SLT (Sh Ct) 5, and British Steel Corporation v Allivane International Ltd. 1989 SLT (Sh Ct) 57.

134

2002 SC 638. See also Douglas v Glenvarigill Co Ltd [2009] CSOH 17; 2009 SCLR 379.

135

2002 SC 638, [51]–[52].

136

TFEU art 267 (ex-EC Treaty art 234). See also Kleinwort Benson Ltd v Glasgow City Council (No. 2) [1997] 4 All ER 641.

137

Fentiman (2015), para 2.127, describes this as a “unilateral floating jurisdiction agreement”.

138

See Mauritius Commercial Bank v Hestia [2013] EWHC 1328 (Comm).

139

See Continental Bank v Aekos [1994] 1 WLR 588 applied in Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] CLC 579.

140

See, for example, Mauritius Commercial Bank v Hestia [2013] EWHC 1328 (Comm).

141

And may fail for lack of consideration: see, for example, Draguiev (2014), p. 27.

142

See Cavendish Square Holding BV v Makdessi Joined with the appeal in Parking Eye Limited v Beavis [2015] UKSC 67 per Lord Neuberger and Lord Sumption at [9].

143

English cases upholding asymmetric clauses include: NB Three Shipping Ltd v Harebell Shipping Ltd [2004] EWHC 2001 (Comm); Law Debenture Trust Corporation PLC v Elektrim Finance BV [2005] EWHC 1412 (Ch); Lornamead Acquisitions Limited v Kaupthing Bank HF [2011] EWHC 2611 (Comm); Mauritius Commercial Bank Ltd v Hestia Holdings Limited [2013] EWHC 1328 (Comm); Barclays Bank PLC v Ente Nazionale [2015] EWHC 2857 (Comm).

144

[2014] EWHC 2001 (Comm).

145

[2005] EWHC 1412 (Ch), [46].

146

[2013] EWHC 1328 (Comm), [43].

147

[2001] Lloyds Rep 76, [42].

148

“The principle of equality of arms concerns the position of the parties before a court, not whether the parties have an equal choice of forum”: Fentiman (2015), para 2.149.

149

[2013] EWHC 1328 (Comm), [37].

150

A similar construction was adopted in Commerzbank v Liquimar [2017] EWHC 161 (Comm) and the same conclusion reached. Furthermore, the judge also commented obiter that he would not have acceded to the defendant’s argument that the clause was invalid even if it bore the construction for which the defendant contended. “If, improbably, the true intention of the parties expressed in the clause was that [the bank] should be entitled to insist on suing or being sued anywhere in the world, that is the contractual bargain to which the court should give effect” [2013] EWHC 1328 (Comm), [43]. Cf. Fentiman (2015), para 2.141 arguing that a wider construction would not be valid under Art 25.

151

Regulation 44/2001, which was replaced by the BIR recast. The Regulation itself replaced the Brussels Convention 1968.

152

Case C-22/85.

153

Article 17(3) of the version of the Convention in force at the time.

154

Case C-23/78.

155

The clause was asymmetric in that the obligations on each party differed (although it was not for the benefit of one particular party) and also was not exclusive in that it named two different courts.

156

See in Anterist Case 22/85 at [14]: “Since Article 17 of the convention embodies the principle of the parties’ autonomy to determine the court or courts with jurisdiction, the third paragraph of that provision must be interpreted in such a way as to respect the parties’ common intention when the contract was concluded.” (emphasis added). In Meeth Case 23/78 [5]: “This interpretation is justified on the ground that Article 17 is based on a recognition of the independent will of the parties to a contract in deciding which courts are to have jurisdiction to settle disputes falling within the scope of the convention …’(emphasis added).

157

Fentiman (2013), p. 26. See also Financial Markets Law Committee (2016), [1.4].

158

French Cour De cassation (Supreme Court) (First Civil Chamber) [2013] I L Pr 12.

159

A claim was also brought against a French financial company based on Art 6.

160

Translation from [2013] I L Pr 12 at [9]. The Cour de cassation appeared to strike the clause down in its entirety. Whether it is possible to sever the unilateral part of the clause and salvage the rest (as to which see Garvey 2016, p. 8) should depend on the parties’ intentions, in particular, whether the separate obligations contained in the agreement were intended to be conditional on one another.

161

Keyes and Marshall (2015), p. 367, note that although Madame X was plainly a consumer according to the Regulation, because the Bank seemingly did not direct its activities towards Madame X’s place of domicile, the Regulation’s jurisdictional rules that protect consumers did not apply. See also Petch (2016), p. 319, referring to two decisions in Luxembourg relying on her status as a consumer.

162

French Supreme Court, First Civil Chamber, 25 March 2015, Case 13-27264 [2015] I L Pr 39.

163

Which was in the same terms as Art 23 of the Brussels Regulation.

164

French Supreme Court, First Civil Chamber, 7 October 2015 Case 14-16898.

165

Translation [2016] I L Pr 13, [6].

166

See e.g. Fentiman (2013), p. 24: “Rothschild flies in the face of market practice and has caused consternation amongst practitioners. For many reasons the decision is as perplexing as it is controversial”. Popplewell J in Hestia (in deciding whether or not the courts of Mauritius would be likely to follow Rothschild) commented at [34]: “The decision is controversial and has been subjected to criticism by commentators, both domestically and in the context of art. 23 which requires an autonomous interpretation. It is arguably inconsistent with previous decisions of the Cour de cassation, although consistent with decisions of the lower courts”. Cf. Briggs (2014), para 4.190, suggesting that a clause which allowed one party to sue wherever he wishes, may overreach the limits of Art 25.

167

See the summary in Financial Markets Law Committee (2016), [1.3] referring to decisions of the Bulgarian Supreme Court, French courts and Polish courts. A summary of relevant European legislation is set out in an Annex to the Report. See, for further comparative analysis, Draguiev (2014); Keyes and Marshall (2015), fn 4.

168

See Beale and Clayson (2013), p. 464.

169

Fentiman (2013), p. 25.

170

It is unclear why the court referred to French law and not the law of Luxembourg, although the same doctrine is to be found in both: see Petch (2016), p. 320.

171

Cf. Fentiman (2013), p. 25 suggesting that the French court did not apply French law directly so the decision contributes nothing to the familiar controversy about the relevance of national law in determining the validity of Art 23 agreements.

172

[2003] All ER (Comm) 683, [59].

173

See also Briggs, noting that the CJEU had “gone out of its way to insist that the jurisdictional validity and jurisdictional effect of an agreement on jurisdiction, which falls within the domain of Art 23 is to be assessed not by reference to any national law, … but only by asking whether the consent of the party who is to be held to the agreement can be demonstrated with clarity and precision”: (2008), p. 378.

174

Recital (20) further provides “Where a question arises as to whether a choice of court agreement in favour of a court or the courts of a Member State is null and void as to its substantive validity, that question should be decided in accordance with the law of the Member State of the court or courts designated in the agreement, including the conflict of law rules of that Member State”.

175

Magnus and Mankowski (2016), Art 25 [33] conclude that the reference to national law in Art 25 relates only to grounds which invalidate an existing agreement, and not all the requirements for a legally binding agreement e.g. consideration etc. (see e.g. [81c].) See also Dickinson and Lein (2015), para 9.69: the reference to national law is, in principle, very limited: it only includes the grounds for material invalidity based on defects of consent (fraud, misrepresentation, duress or mistake), lack of authority or lack of capacity. It does not cover issues of contractual enforceability exogenous to the consent or capacity of the parties, such as illegality or public policy.

176

Recital (20) provides that the question of validity should be decided in accordance with the law of the Member State of the court or courts designated in the agreement, including the conflict of law rules of that Member State.

177

Agreements on choice of law are excluded from the scope of the Rome I Regulation (Art 1(2)(e)). At common law, although a choice of court agreement is a severable agreement, there is a presumption that it is governed by the same law as that which applies to the underlying agreement: Mauritius Commercial Bank v Hestia [2013] EWHC 1328 (Comm). If there is an exclusive jurisdiction agreement the underlying agreement is likely to be governed by English law: see, at common law, The Kominos S [1991] 1 Lloyd’s Rep; the Giuliano & Lagarde Report to the Rome Convention [1980] OJ C282/1 at 15–17 and Recital (12) to the RIR.

178

[2017] EWHC 161 (Comm), [80] per Cranston J.

179

See also Magnus and Mankowski (2016), Art 25 [81h]. Dickinson and Lein (2015), para 9.65, also refer to this issue but conclude that the solution depends on the court before which the material validity of the clause is contested and, in the case of asymmetric agreements, that the validity should always be tested according to the designated court’s law.

180

Rowan (2017).

181

For example, new clause 1169 which provides “An onerous contract is a nullity where, at the moment of its formation, what is agreed in return for the benefit of the person undertaking an obligation is illusory or derisory”. Significant imbalance is also addressed in a consumer context: see Pillet (2016), p. 250.

182

If that is right, the decision in Apple is distinguishable because it referred to courts where harm was suffered.

183

For example, in China there is a general requirement that a chosen court must have a real connection with the dispute. A competent court would have to be one which includes conformity with rules on real connection: see Liang (2015), p. 345.

184

Erich Gasser GmbH v MISAT Srl Case C-116/02.

185

[2017] EWHC 161 (Comm).

186

There were essentially four proceedings, comprising two pairs of parallel proceedings in Greece and in England.

187

At [40]–[41].

188

In this situation, the bank may not be able to sue elsewhere: Lornamead Acquisitions Ltd v Kaupthing Bank [2011] EWHC 2611, [112].

189

At [52].

190

At [64] (emphasis added).

191

Compare Keyes and Marshall (2015), p. 352, concluding that an agreement will not be exclusive under the recast if it does not exclude the jurisdiction of all but the single chosen jurisdiction.

192

Hartley and Dogauchi (2013), [106]. See also Keyes and Marshall (2015), p. 366, noting that Switzerland proposed that unilateral agreements should be brought within the scope of the Hague Convention, but that this proposal was rejected.

193

See Commerzbank v Liquimar Tankers Management Inc [2017] EWHC 16, [39].

194

[2017] EWHC 161 (Comm), [74].

195

[2015] EWHC 2857 (Comm), [127]–[128]. The clause at issue provided: “… each of the parties irrevocably:

(a) agrees for [C’s] benefit that the courts of England shall have jurisdiction to settle any suit, action or other proceedings relating to this Agreement (“Proceedings”) and irrevocably submits to the jurisdiction of such courts (provided that this shall not prevent us from bringing an action in the courts of any other jurisdiction); and

196

Continental Bank v Aeakos [1994] 1 WLR 588.

197

[2009] EWHC 2338 (Comm).

198

Following the reasoning in Continental Bank v Aeakos [1994] 1 WLR 588 discussed above in Sect. 3.1.

199

For example, under the Consumer Rights Act 2015 or the Unfair Contract Terms Act 1977, and special rules apply under the BIR recast in relation to consumers, employees and insured parties. See also Draguiev (2014), p. 40 (“there is a degree of probability that unilateral clauses may be invalidated on grounds of consumer protection”) and Fentiman (2015), para 2.108.

200

The UK will also cease to be a party to the Lugano II Convention (2007) and the Hague Convention. For further discussion see: Dickinson (2016); Rogerson (2017); Harris (2016a, b); Carruthers (2017); and Final Report of the House of Lords European Union Justice Sub-Committee “Implications of Brexit for the justice system” 14 March 2017; The EU and the Legal Sector, The Law Society of England and Wales 2015; Brexit Paper 4: Civil Jurisdiction and the Enforcement of Judgments; The General Council of the Bar.

201

Department for Exiting the European Union and The Rt Hon David Davis MP (CM 9417) (2 February 2017).

202

March 2017 White Paper, Foreword from the Prime Minister, p. 5.

203

In contrast to the position in relation to the RIR which is not reciprocal and where it would be possible to implement equivalent rules into national domestic law.

204

Turner v Grovit Case C-159/02 and, in the context of arbitration, Allianz SpA v West Tankers Inc Case C-185/07.

205

Pace, comments in Ahmed and Beaumont (2017).

206

See Parliamentary Committee reports, the House of Lords European Union Committee, 17th Report of Session 2016/17, “Brexit: justice for families, individuals and businesses?” (HL Paper 134 (20 March 2017)), and the House of Commons Justice Committee, 9th Report of Session 2016/17, “Implications of Brexit for the Justice System” (HC 750 (22 March 2017)), each of which urges the UK Government to seek to negotiate a solution which keeps as close as possible to the existing private international law rules when negotiating their post-Brexit application.

207

HM Government (2017).

208

HM Government (2017), [15].

209

HM Government (2017), [25].

210

HM Government (2017), [22].

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Title: United Kingdom: Giving Effect to Optional Choice of Court Agreements—Interpretation, Operation and Enforcement
Authors: Louise Merrett
Janeen Carruthers
Publisher: Springer International Publishing
Book: Optional Choice of Court Agreements in Private International Law
Print ISBN: 978-3-030-23913-8

Electronic ISBN: 978-3-030-23914-5

Copyright Year: 2020
DOI: https://doi.org/10.1007/978-3-030-23914-5_19