Published online by Cambridge University Press: 11 October 2017
Asymmetric jurisdiction clauses are clauses which contain different provisions regarding jurisdiction for each party. They are widely used in international financial markets. However, the validity of this form of agreement has been called into doubt in several European jurisdictions. Furthermore, following Brexit, there may well be an increasing focus on alternative methods of enforcement under the Hague Convention and at common law, claims for damages and anti-suit injunctions. As well as considering recent developments in the case law and the implications of Brexit, this article will emphasize that all of these questions can only be answered after the individual promises contained in any particular agreement are properly identified and construed. Once that is done, there is no reason why the asymmetric nature of a clause should be a bar to its enforcement.
1 As Fentiman, R, International Commercial Litigation (2nd edn, Oxford 2015)Google Scholar, notes [2.05] dispute resolution clauses in commercial transactions now commonly seek to regulate all aspects of a dispute including mechanism for service of notice, waiver of right to object to the venue or enforcement, indemnities etc. This article will focus on the core aspect of such agreements, that is, the mechanism and venue for resolving disputes. The terms jurisdiction agreement (which tends to be used at common law) and choice of court agreement (which is often used in international Conventions) will be used to describe this core aspect of a dispute resolution clause.
2 Regulation (EU) No 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast). The recast Regulation applies to proceedings commenced on or after 10 January 2015.
3 The Hague Convention on Choice of Court Agreements 2005.
4 See, for example, Briggs, A ‘The Subtle Variety of Jurisdiction Agreements’ (2012) LMCLQ 364 Google Scholar, 376. cf Joseph, D, Jurisdiction and Arbitration Agreements and their Enforcement (3rd edn, Sweet & Maxwell 2015)Google Scholar [4.03]: arguing that the labels exclusive and non-exclusive jurisdiction agreements and the distinction between them are of central importance to the application of the BIR recast, Lugano II and Hague Conventions.
5 Confirmed at common law by Fiona Trust & Holding Corp v Privalov  UKHL 40 and, under the BIR recast, by Benincasa v Dentalkit srl Case C-269/95 and now by art 25.5 of the recast Regulation.
6 See, for example, Collins, L, Dicey, Morris and Collins on the Conflict of Laws (15th edn, Sweet & Maxwell 2012) [12–105]Google Scholar ‘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.’
7 Although given the doctrine of severability which 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  UKHL 40.
8 Briggs, A, Agreements on Jurisdiction and Choice of Law (Oxford 2008)Google Scholar: [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 … But from another vantage point the agreement is promissory, made between individuals who have bargained for undertakings about where each will accept service of process.’
9 See Fentiman, International Commercial Litigation (n 1) [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’.
10 Powell Duffryn plc v Wolfgang Petereit Case C- 214/89 and see Roche Products Ltd v Provimi  All ER (Comm) 683.
11 Commerzbank Aktiengesellschaft v Pauline Shipping Limited Liquimar Tankers Management Inc  EWHC 161 (Comm)  per Cranston J.
12 This term is used particularly when the clause incorporates an alternative arbitration/court dispute resolution mechanism.
13 See Financial Markets Law Committee Report (FMLC Report) on Issues of Legal Uncertainty Arising in the Context of Asymmetric Jurisdiction Clauses (July 2016) [1.2].
15 Clauses drafted in a similar way were at issue in Lornamead Acquisitions Ltd v Kaupthing Bank HF  EWHC 2611 (Comm) and Mauritius Commercial Bank v Hestia  EWHC 1328 (Comm).
16 NB Three Shipping Ltd v Harebell Shipping Ltd  EWHC 2001 (Comm). A similar clause was at issue in Law Debenture Trust Corp2oration PLC v Elektrim Finance BV  EWHC 1412 (Ch) although the order was reversed ie the dispute was to be submitted to arbitration but with a one-sided option to litigate.
17 See Joseph, Jurisdiction and Arbitration Agreements and their Enforcement (n 4) [4.02] and Magnus, U and Mankowski, P, European Commentaries on PIL Brussels Ibis Regulation (Ottoschmidt 2016)CrossRefGoogle Scholar art 25  referring to a prorogation effect and a derogation effect. The same terminology is used in A Dickinson and Lein, E, The Brussels I Regulation Recast (Oxford 2015)Google Scholar [9.06].
18 Effectively a unilateral submission in advance to the jurisdiction of the named court: Briggs (2012) LMCLQ 364 (n 4) 378.
19 See Lord Mance in AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower JSC   UKSC 35;  2 Lloyd's Rep 201 referring to the ‘negative promise’ in an exclusive jurisdiction agreement.
20 A unilateral renunciation of jurisdiction which would otherwise have been found in other courts: Briggs (2012) LMCLQ 364 (n 4) 378.
21 For a detailed discussion see Keyes, M and Marshall, B ‘Jurisdiction Agreements: Exclusive, Optional and Asymmetric’ (2015) JPrivIntL 345 Google Scholar.
22 BNP Paribas SA v Anchorage Capital Europe LLP  EWHC 3073 (Comm) at  and Fentiman, International Commercial Litigation (n 1) [2.61].
23 Fentiman, International Commercial Litigation (n 1) describes this as a ‘unilateral floating jurisdiction agreement’ [2.127].
24 See Mauritius Commercial Bank v Hestia  EWHC 1328 (Comm).
25 See Continental Bank NA v Aeakos Compania Naviera SA  1 WLR 588 applied in Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd  CLC 579.
26 See, for example, Mauritius Commercial Bank v Hestia  EWHC 1328 (Comm).
27 And may fail for lack of consideration: see, for example, Draguiev, D ‘Unilateral Jurisdiction Clauses: The Case for Invalidity, Severability or Enforceability’ (2014) JIntLArb , 19 Google Scholar, 27.
28 BIR recast art 6.
29 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 (n 27) 19, ibid, 40: ‘there is a degree of probability that unilateral clauses may be invalidated on grounds of consumer protection’ and Fentiman, International Commercial Litigation (n 1) [2.108].
30 The arguments in relation to optional agreements more generally are discussed in detail by Keyes and Marshall (2015) JPrivIntL 345 (n 21).
31 Joined with the appeal in Parking Eye Limited v Beavis  UKSC 67.
32 Per Lord Neuberger and Lord Sumption (with whom Lord Carnworth agreed) at .
33 Per Lord Neuberger and Lord Sumption at .
34 Per Lord Hodge at .
35 Per Lord Neuberger and Lord Sumption at .
36 English cases upholding asymmetric clauses include: NB Three Shipping Ltd v Harebell Shipping Ltd  EWHC 2001 (Comm); Law Debenture Trust Corporation PLC v Elektrim Finance BV  EWHC 1412 (Ch); Lornamead Acquisitions Limited v Kaupthing Bank HF  EWHC 2611 (Comm); Mauritius Commercial Bank Ltd v Hestia Holdings Limited  EWHC 1328 (Comm); Barclays Bank PLC v Ente Nazionale  EWHC 2857 (Comm).
37  EWHC 2001 (Comm).
38  EWHC 1412 (Ch), .
39  EWHC 1328 (Comm), .
40  Lloyd's Rep 76, .
41 ‘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, International Commercial Litigation (n 1) [2.149].
42  EWHC 1328 (Comm), .
43 A similar construction was adopted in Commerzbank v Liquimar  EWHC 161 (Comm) and the same conclusion reached. Furthermore, Popplewell J in Hestia  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 is 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”. cf Fentiman, International Commercial Litigation (n 1) [2.141] arguing that a wider construction would not be valid under art 25.
44 The last sentence, that is, that jurisdiction shall be exclusive unless the parties have agreed otherwise, is better seen as an aspect of effect rather than construction of the agreement. Questions of construction are, as explained above, for national law. But when it comes to the effect given to a clause under art 25, that effect will be to give the named clause exclusive jurisdiction unless the parties have agreed otherwise.
45 Regulation 44/2001 which was replaced by the BIR recast. The Regulation itself replaced the Brussels Convention 1968.
46 Case C-22/85.
47 Art 17(3) of the version of the Convention in force at the time.
48 Case C-23/78.
49 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.
50 See Anterist Case C-22/85 : ‘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.’ Meeth Case C-23/78 : ‘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).
51 Fentiman (2013) CLJ 24 (n 51) 26. See also FMLC Report (n 14) [1.4].
52 French Cour de cassation (Supreme Court) (First Civil Chamber)  I L Pr 12.
53 A claim was also brought against a French financial company based on art 6: this aspect of the decision is not relevant to the issues discussed in this article.
54 Translation from  I L Pr 12 at . 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, S, ‘Hybrid Jurisdiction Clauses: Time for a Rethink?’ (2016) JIBFL 6 Google Scholar, 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.
55 Keyes and Marshall (n 21) at 367, note that although Mme X was plainly a consumer according to the Regulation, because the Bank seemingly did not direct its activities towards Mme X's place of domicile, the Regulation's jurisdictional rules that protect consumers did not apply. See also Petch, T, ‘The Treatment of Asymmetric Jurisdiction Agreements in England and in France’ (2016]) UCLJLandJ , 313 Google Scholar, 319 referring to two decisions in Luxembourg relying on her status as a consumer.
56 French Supreme Court, First Civil Chamber (5 March 2015) Case 13-27264  I L Pr 39.
57 Which was in the same terms as art 23 of the Brussels Regulation.
58 French Supreme Court, First Civil Chamber (7 October 2015) Case 14-16898.
59 Translation  I L Pr 13, .
60 See eg Fentiman (2013) CLJ 24 (n 51) 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 : ‘The decision is controversial and has been subjected to criticism by commentators, both domestically and in the context of Article 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, A, Private International Law in English Courts (Oxford 2014)Google Scholar [4.190] suggesting that a clause which allowed one party to sue wherever he wishes may overreach the limits of art 25.
61 See the summary in FMLC Report (n 14) [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  JIntLArb 19 (n 27) and Keyes and Marshall (2015) JPrivIntL 345 (n 21), fn 4.
62 See Beale, N and Clayson, C ‘One-Way Jurisdiction Clauses: A One-Way Ticket to Anywhere?’  JIBL 463 Google Scholar, 464.
63 Fentiman  CLJ 24 (n 51) 25.
64 It is unclear why the court referred to French law not the law of Luxembourg, although the same doctrine is to be found in both: see T Petch (n 55) 313, 320.
65 cf Fentiman (2013) CLJ 24 (n 51), 25 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.
66  All ER (Comm) 683, .
67 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’: (2012) LMCLQ 364 (n 4), 378.
68 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’.
69 Magnus and Mankowski, European Commentaries on PIL Brussels Ibis Regulation (n 17) art 25  conclude that the reference to national law in art 25 relates only to grounds which invalidate an existing agreement not all the requirements for a legally binding agreement eg consideration etc. (See eg [81c].) See also Dickinson and Lein, The Brussels I Regulation Recast (n 17) [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.
70 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.
71 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  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  1 Lloyd's Rep; the Giuliano Lagarde Report to the Rome Convention  OJ C282/1 at 15–17 and Recital (12) to the RIR.
72  EWHC 161 (Comm),  per Cranston J.
73 See also Magnus and Mankowski (n 17) art 25 [81h]. Dickinson and Lein (n 17) [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.
74 S Rowan, ‘The New French Law of Contract’ ICLQ online (22 August 2017) at <https://doi.org/10.1017/S0020589317000252>.
75 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, G, ‘The Reform of French Contract Law and the General Rules on Obligations: The Civil Code Faces the Challenges of the Market’ (2016) IBLJ 235 Google Scholar, 250.
76 If that is right, the decision in Apple is distinguishable because it referred to courts where harm was suffered.
77 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, Wenwen, ‘Unilateral Jurisdiction Clauses under Chinese law’ (2015) JIBLR 341 Google Scholar, 345.
78 Erich Gasser GmbH v MISAT Srl Case C-116/02.
79  EWHC 161 (Comm).
80 There were essentially four proceedings, comprising two pairs of parallel proceedings in Greece and in England.
81 At –.
82 In this situation, the bank may not be able to sue elsewhere: Lornameed Acquisitions Ltd v Kaupthing Bank  EWHC 2611, .
83 At .
84 At .
85 Compare Keyes and Marshall (n 21) 345 at 352 concluding that agreements will not be exclusive under the recast if it does not exclude the jurisdiction of all but the single chosen jurisdiction.
86 The UK will also cease to be a party to the Lugano II Convention (2007) and the Hague Convention. For further discussion see: Dickinson, A, ‘Back to the Future: the UK's EU Exit and the Conflict of Laws’ (2016) JPrivIntL 195 Google Scholar; Rogerson, P, ‘Litigation Post-Brexit’ (2017) NLJ 2016Google Scholar; Harris, J, ‘How Will Brexit Impact on Cross-Border Litigation?’ (2016) SJ 160 Google Scholar; ‘Brexit & Cross-Border Dispute Resolution’ (2016) NLJ 166; Final Report of the House of Lords European Union Justice Sub-Committee ‘Implications of Brexit for the justice system’ (14 March 2017).
87 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.
88 Committees of both Houses of Parliament continue to consider the implications of Brexit for the justice system as do many professional bodies including COMBAR and the Law Society.
89 At . See also Keyes and Marshall (n 21) 345 at 366 noting that Switzerland proposed that unilateral agreements should be brought within the scope of the Hague Convention but that this proposal was rejected.
90 See Commerzbank v Liquimar  EWHC 16, .
91  EWHC 161 (Comm), .
92 See Fentiman, International Commercial Litigation (n 1) [2.249].
93  1 Lloyds Rep 425 (HL)
94  UKSC 70.
95 This argument was rejected by the Court of Appeal in The Alexandros T  EWCA Civ 2010 but has yet to be tested by the CJEU. An analogous point was raised but did not need to be answered in the context of a claim for damages for inducing breach of contract in AMT Futures Ltd v Marzillier  UKSC 13.
96  EWHC 2857 (Comm) –. 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.’
97 Continental Bank v Aeakos  1 WLR 588.
98  UKSC 13.
99 Turner v Grovit Case C-159/02 and, in the context of arbitration, Allianz SpA v West Tankers Inc Case C-185/07.
100  EWHC 2338 (Comm).
101 Following the reasoning in Continental Bank v Aeakos  1 WLR 588 discussed above.