Exclusive jurisdiction clause - courts of more than one state

"All the parties irrevocably agree that the courts of [England and Germany] 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."

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

• if the clause names two courts of EU Member States the clause will be treated as giving any of those courts, but only them, jurisdiction provided that the clause is not null and void as to its substantive validity under the law of the chosen EU Member States. Subject to that, the chosen EU Member State court in which proceedings are first brought must accept jurisdiction and no other court of an EU Member State court may accept jurisdiction.
  • 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 law 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 remain unaffected by it). In relation to the form of clause under discussion this assessment will be relevant from the perspective of each chosen EU Member State court. From the perspective of a choice 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. In such circumstances and in relation to this form of clause, however, you may wish to consider – subject to the treatment of it before the other named court- the addition of an express choice of law in favour of English law to govern the clause so as to leave no room for doubt on the matter. 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.

• if the clause names one court of an EU Member State and one court of a Lugano State, the clause will be treated as giving any of those courts, but only them, jurisdiction. In the case of the choice in in favour of the EU Member State court this carries the additional proviso that the clause is not null and void as to its substantive validity under the law of the chosen EU Member State (see substantive validity under the Brussels I Recast - above). Subject to that, if proceedings are brought first in the chosen EU Member State it must accept jurisdiction and no other EU Member State may accept jurisdiction;
• if the clause names one court of an EU Member State and a non-Brussels Regime State, the clause will be treated as giving only the court of the EU Member State jurisdiction provided that the clause is not null and void as to its substantive validity under the law of the chosen EU Member State (see substantive validity under the Brussels I Recast - above) . Subject to that, if the court is named in the clause it must accept jurisdiction and no other EU Member State may accept jurisdiction;
• if the clause names the courts of two non-Brussels Regime States, and the 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 court can give effect to the clause by staying its proceedings provided a number of other conditions are met (whether it can in any other circumstances is highly debateable), which include that proceedings have first been commenced in the chosen court; see “New rules concerning non-EU lis pendens” in this publication. 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 be free to 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 Lugano State court:

• If the clause names two courts of a Lugano State, or a Lugano State court and an EU Member State court, the clause will be treated as giving any of those courts, but only them, jurisdiction. If any party is domiciled in a Brussels Regime State, the chosen Lugano State court in which proceedings are first brought must accept jurisdiction. No other Lugano State court may accept jurisdiction. If no party is domiciled in a Brussels Regime State, the court of a selected Lugano State may accept jurisdiction (depending on its own rules) and the courts of other Lugano States (other than the named Lugano State court(s)) may not take jurisdiction unless the chosen court first declines jurisdiction;
• if the clause names one court of a Lugano State and one court of a non-Brussels Regime State, the clause will be treated as giving only the court of the Lugano State jurisdiction. Again, if any party is domiciled in a Brussels Regime State, the Lugano State court chosen must accept jurisdiction. No other court of a Brussels Regime State may accept jurisdiction. If no party is domiciled in a Brussels Regime State, the court of a selected Lugano State may accept jurisdiction (depending on its own rules) and. the courts of other Brussels Regime States may not take jurisdiction unless the chosen Lugano State court first declines jurisdiction;
• if the clause names the court of two non-Brussels Regime States and the court would have jurisdiction on the basis of any of the common jurisdictional rules in the Lugano Convention 2007 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 2007it will be free to 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-Brussels Regime State, 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 (see When will a court take jurisdiction?).

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.