CIArb News

One-sided jurisdiction clauses in Europe: What should it take to assess thier validity

16 Jan 2019

Author: Mag. Georg Gutfleisch LL.M

Contractual arrangements in international commerce are subject to the principle of party autonomy. The general possibility of the parties to agree on the competent court for potential disputes arising out of or in connection with the relevant agreement can be regarded as integral aspect of this principle. The concerning agreement between the parties could, for instance, also involve the (exclusive) competence of different national courts for different types of disputes or unilateral optional agreements giving one party an option to select the forum.[1] The question of whether such particular arrangements can be considered as valid or not has regularly been subject to controversial discussions.

European courts have taken different positions to the question whether such “one-sided or asymmetrical” jurisdiction agreements should be valid or not. While courts in common law jurisdictions regularly accept such agreements as legitimate and enforceable, other courts, particularly French courts, declined their validity.[2] One of the most intensively discussed decisions in this regard is the ruling of the French Cour de Cassation in the Rothschild case [3] concerning a dispute between a French national domiciled in Spain and a bank of the Rothschild group in Luxembourg. The concerning jurisdiction agreement provided for the exclusive jurisdiction of the national courts in Luxembourg but granted the bank the right to commence proceedings “in the client’s place of domicile or in front of any other competent court”. [4] The French Cour de Cassation set aside the jurisdiction clause and argued that it was “contrary to the object and the finality of the prorogation of jurisdiction in article 23 of the [Brussel] Regulation”.[5] 

The Brussel Recast Regulation does not explicitly address one-sided or asymmetrical jurisdiction clauses. However, one of the most significant questions in this relation is whether one-sided or asymmetrical jurisdiction clauses may even be qualified as “exclusive jurisdiction” agreements under the Brussel Recast Regulation or not. The qualification of a jurisdiction clause as exclusive under the Brussel Recast Regulation can have wide reaching consequences for the involved parties. For instance: The Brussel Recast Regulation connects its lis pendens requirements on the “exclusiveness” of a jurisdiction clause. Thus, only exclusive jurisdiction clauses are subject to Article 31 (2) Brussel Recast Regulation, which is preventing the application of the first-in-time principle and ensuring an effective enforcement.

Keyesa and Marshallb, for instance, comprehensively analysed the “exclusiveness” of  jurisdiction clauses under the Brussel Recast Regulation and concluded that any agreement, which does not exclude the jurisdiction of all but the single chosen jurisdiction for each party should be regarded as non-exclusive notwithstanding that the parties may have characterized it as “exclusive”. [6] The authors based their assessment on the Meeth v Glacetal case, where the CJEU ruled that a jurisdiction agreement was only exclusive under the Brussels Convention if it excluded the jurisdiction of all other competent Member State courts for each party. [7]

When attempting to assess whether one-sided or asymmetrical jurisdiction clauses should be valid and enforceable or not, several aspects should be considered. On the one hand, it is clear to consider the personal qualities and capabilities of the parties in question. Consumers, for instance, usually have much less negotiation power and less financial resources when contracting with companies. [8] On the other hand, it is also important to consider the dispute in question and whether there are certain objective reasons to deviate from the agreement of one single national court having jurisdiction over disputes arising out of or in connection with such contract (such as the requirement of ensuring the proper enforcement of court decisions).[9] Finally, the validity of one-sided or asymmetrical jurisdiction clauses must also be assessed on the basis of the circumstances of the contract conclusion. Expressively negotiated and agreed jurisdiction clauses would typically be better justifiable than jurisdiction clauses included in standardized terms and conditions.[10] Providing that the above assessments result in a reasonably equal distribution of powers between the concerned parties, it would in any case need to be ruled in favour of the prevailing principle of party autonomy. The parties are generally free to agree on the contractual arrangements including the competent court to rule on potential disputes in the future. The legislator should only deviate from this principle and impose mandatory restrictions when the circumstances provide for a significant disparity between the parties and a particular need for protection of an involved party.

Concluding, the validity of one-sided or asymmetrical jurisdiction clauses should always be assessed on a case-by-case basis considering the specific characteristics of the parties, the subject matter of the dispute as well as the circumstances of the contract conclusion. In the case that there are no special circumstances justifying a different approach, the principle of party autonomy should prevail.

[1]    Mary Keyesa and Brooke Adele Marshallb, ‘Jurisdiction agreements: exclusive, optional and asymmetrical’ (2015) 11/3 Journal of Private International Law 345–378, 345.

[2]    Ibid 346.

[3]    Cass civ, 1ère, 26.09.2012 Madame X v Banque Privée Edmond de Rothschild No 11-26.022 (Rothschild).

[4]    Marie-Elodie Ancel, Lea Marion and Laurence Mynaendts, ‘Reflections on one-sided jurisdiction clauses in international litigation (about the Rothschild decision, French Cour de Cassation, 26 September 2012)’ (2013) 148 Banque & Droit 3-9, 4 < https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2258419 > accessed 5 April 2018.

[5]    Ibid.

[6]    Keyesa and Marshallb (n 80) 352.

[7]    Ibid 351; Case 23/78 Meeth v Glacetal Sarl [1978] ECR 2133.

[8]    See, for instance, the special provisions of the Brussel Recast Regulation with respect to consumer contracts in Article 19 or employment contracts in Article 23.

[9]    This could, for instance, be referenced by the provisions of the Brussel Recast Regulation with respect to stay proceedings of European courts in the case of ongoing proceedings in third countries. Stay proceedings shall only be ordered when the judgment of the third-country court can be recognised and enforced in the respective EU member state (Brussel Recast Regulation, art 33 (1) (a), art 34 (1) (b)).

[10]  In Austria, for instance, jurisdiction agreements included in terms and conditions are generally vulnerable to being declared void by the court when they are of unusual content and adverse for the party not having used the terms and conditions (§ 864a of the Austrian Civil Code (Allgemein Bürgerliches Gesetzbuch, ABGB)).

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