Exclusive jurisdiction clause - courts of one state

"All the parties irrevocably agree that the courts of [England] are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement and that accordingly any proceedings arising out of or in connection with this Agreement shall be brought in such courts."

This is the type of jurisdiction clause normally used in commercial contracts.

If the case comes before a court of an EU Member State court:

  • if the clause names that court, it must accept jurisdiction (and no other EU Member State may accept jurisdiction) unless the clause is null and void as to its substantive validity under the law of the chosen EU Member State.
  • Substantive validity under the Brussels I Recast: In relation to clauses in favour of EU Member State courts the Brussels I Recast (which applies before the EU Member State courts in relation to proceedings commenced on or after 10 January 2015) introduced a rule which states that the chosen court shall have jurisdiction unless the clause is null and void as to its substantive validity under the law of the chosen EU Member State. Note that determining the applicable law for such purposes includes the application of the chosen EU Member State’s conflict of laws rules (Recital 20). In this context, that means the court’s own, national conflict rules as to the law applicable to a jurisdiction clause - neither the Rome Convention nor the Rome I Regulation apply to jurisdiction clauses (nor arbitration clauses) as such are excluded from their scope.
  • When using a jurisdiction clause in favour of an EU Member State court, it may therefore be advisable to consider whether and how it might be affected by this rule (clauses in favour of the Lugano States (i.e. Switzerland, Iceland or Norway) remain unaffected by this rule). From the perspective of a clause in favour of the English courts, in the usual circumstances where English law is also the governing law of the main contract, this is unlikely to cause a problem in most transactional or financing contracts between commercial entities as English law would apply to the clause and it generally upholds the parties’ bargain in this area. As with any contract governed by English law, however, in more specialised areas (e.g. consumer contracts) where some general regulation of the parties’ bargaining power may exist parties may wish to consider how, if at all, that may impact on the matter.
  • (NB: This rule was inserted into the Brussels I Recast in order to conform with the Hague Convention on Choice of Court Agreements. That instrument may, in certain limited circumstances (see here for more), govern the effect to be given to an exclusive jurisdiction clause by a chosen EU Member State court. The conformity ensures the approach of the chosen court is the same whether the Brussels I Recast or the Hague Convention applies).
  • if the clause names as the exclusive jurisdiction the courts of another EU Member State, the court before which the case has been brought should, generally, stay its proceedings as soon as the designated court has been seised, and that designated court can progress regardless. See proceedings brought in breach of an exclusive jurisdiction clause for more detail;
  • if the clause names the court of a Lugano State, and any party is domiciled in a Brussels Regime State the seised court may not accept jurisdiction. If no party is domiciled in a Brussels Regime State, the seised court may not take jurisdiction over the dispute until the chosen court has first declined jurisdiction. Although, therefore, the court before which the case has been brought should decline to hear it, it is also the case that if proceedings have not yet been commenced in the chosen court, they will have to wait until that court has done so. See proceedings brought in breach of an exclusive jurisdiction clause for more detail;

if the clause names the court of a non-Brussels Regime State:

  • if the seised court would also have jurisdiction on the basis of any of the common jurisdictional rules in the Brussels I Recast (see Jurisdiction under the Regulation), the seised court can give effect to the clause by staying its proceedings provided a number of other conditions are met. These include that proceedings have first been commenced in the chosen court; see “New rules concerning non-EU lis pendens” in this publication.Further, where the clause is in favour of a non-EU Hague State, it may also be given effect pursuant to the Hague Convention on Choice of Court Agreements in cases within the scope of the Hague Convention and where that instrument otherwise applies (for more on the Hague Convention, click here). Other than these two instances, it is debatable whether any other bases exist upon which the EU Member State may decline to exercise its Brussels I Recast based jurisdiction in such circumstances.
  • if the court would have jurisdiction on the basis of any of the common jurisdictional rules in the Lugano Convention 2007(see Jurisdiction under the Lugano Convention) then the English courts treat themselves as having a discretion whether or not to give effect to the clause, though this is a controversial area;
  • otherwise, where the defendant is domiciled outside of a Brussels Regime State and the court would not have jurisdiction on the basis of any of the aforementioned common jurisdictional rules it will (pursuant to Article 6 of the Brussels I Recast) apply its own national law to determine the effect of the clause; or, where the clause is in favour of a non-EU Hague State, it may be given effect pursuant to the Hague Convention on Choice of Court Agreements in cases within the scope of the Hague Convention and where that instrument otherwise applies (For more on the Hague Convention, click here);
  • a jurisdiction clause is ineffective in certain types of dispute.

If the case comes before a court of a Lugano State:

  • if the clause names that court, and any party is domiciled in a Brussels Regime State, the court chosen must accept jurisdiction (and no other court of a Brussels Regime State may accept jurisdiction);
  • if the clause names that court, and no party is domiciled in a Brussels Regime State, the chosen court may accept jurisdiction (depending on its own rules). The courts of other Brussels Regime States may not take jurisdiction unless the chosen court first declines jurisdiction;
  • if the clause names the court of an EU Member State, and any party is domiciled in a Brussels Regime State, the court may not accept jurisdiction. If no party is domiciled in a Brussels Regime State, the court may not take jurisdiction over the dispute until the chosen court has first declined jurisdiction;
  • Where the clause names a Lugano State (other than itself) or an EU Member State, the court before which the case has been brought should decline to hear it in line with the above. However, it is also the case that if proceedings have not yet been commenced in the chosen court, they will have to wait until that court has done so. See proceedings brought in breach of an exclusive jurisdiction clause for more detail;
  • if the clause names the court of a non-Brussels Regime State and the court would have jurisdiction on the basis of any of the common jurisdictional rules in the Lugano Convention 2007(see Jurisdiction under the Lugano Convention) it is a controversial area as to whether it can give effect to the clause. Otherwise, where the defendant is domiciled outside of a Brussels Regime State and the court would not have jurisdiction on the basis of any of the common jurisdictional rules in the Lugano Convention 2007 it will (pursuant to Article 4 of the Lugano Convention) apply its own national law to determine the effect of the clause;
  • a jurisdiction clause is ineffective in certain types of dispute.

If the case comes before a court of a non-EU Hague State in circumstances within the scope of the Hague Convention of Choice of Court Agreements and where that instrument otherwise applies (see here):

  • if the clause names that court then it must accept jurisdiction (and no other Hague Contracting State may accept jurisdiction – subject to certain exceptions set out in Article 6 of the Hague Convention) unless the clause is null and void as to its substantive validity under the law of the chosen State. In this context (as with the Brussels I Recast) determining the applicable law for such purposes includes the application of the chosen Hague Contracting State’s conflict of laws rules;
  • if the clause names the court of another Hague Contracting State then the court may not accept jurisdiction (subject to certain exceptions set out in Article 6 of the Hague Convention);
  • if the clause names a court that is not a Hague Contracting State then the case falls outside the scope of the Hague Convention on Choice of Court Agreements and the court will apply its own rules as to whether to give effect to the clause (which will also be the case before such a court should, for any other reason, the case fall outside the scope of the Hague Convention).

If the case comes before a court of a State that is neither a Brussels Regime State nor a non-EU Hague State then it will apply its own rules as to whether it gives effect to the clause - in common law countries such as the US and Australia, a court will usually give effect to such a clause, but retains a discretion not to do so.

The clause may be supplemented by:

  • a Submission and Waiver (which is usual in US clauses), and/or
  • a benefit clause (which has the effect that you may sue in the chosen court or in any other court that will take jurisdiction).

See Which jurisdiction clause? for guidance as to which clause to use in which circumstances.

In respect of choices in favour of the English court, please click here to read our analysis of the potential impact of Brexit on the effect to be given to such a clause in both England and EU Member States/Lugano States and (in cases falling within the scope of the Hague Convention) non-EU Hague States.