JURISDICTION AGREEMENTS
Nature and effects of jurisdiction agreements
Pacta sunt servanda', agreements are made to be kept. So are those by which parties promise each other where they will and will not sue each other.[1] The common law deals separately and distinctly with stay applications which are founded on an agreement made for the jurisdiction of a foreign court and for the non-exercise of jurisdiction by the English court. Two reasons in particular justify doing so. First, in Spiliada itself, Lord Goff of Chieveley doubted whether there should be any cross-fertilisation between this basis for a stay of proceedings and that, examined in the previous Chapter, which applied when there was no prior agreement on choice of court. Second, in applying for a stay, the defendant is making an allegation of specific wrongdoing: the claimant is breaking his contract and should be prevented from doing so, just as any other party in breach should.
An agreement between the parties that they will litigate only in the English courts does not, as a matter of common law, establish the jurisdiction of the English court: only service of process does that. But it does mean that jurisdiction established by service will be most unlikely to be stayed; and where the defendant is out of the jurisdiction, the agreement provides a firm basis for permission to serve out of the jurisdiction, as will be shown later in this chapter. An agreement between the parties that they will litigate only in a foreign court does not, as a matter of common law, oust or deny the jurisdiction of the English court which has been established by service, but it does provide a firm basis for an application for a stay of those proceedings, as will be shown in this Chapter. In addition to its effect on the law of stays of proceedings, an agreement by the parties that they will litigate only in the English courts may provide a cause of action for an injunction to restrain the party in breach of it from suing in a court overseas,[2] or a cause of action for damages for breach of contract if any loss is proved.
An agreement on choice of court for a foreign court does not give rise to a right to a stay of English proceedings which contradict it. A stay of proceedings may not be equitable relief, but procedural orders of this kind are also a matter of judicial discretion. However, the defendant has a greatly enhanced expectation of obtaining a stay of proceedings.
Where the boot is on the other foot, and proceedings are brought in a foreign court in breach of an agreement for the English courts, the general expectation is that the breach of contract will justify an application for an injunction to restrain the party in breach. Whether or not he obtains that relief, he may certainly argue that where a contract is broken, the common law gives him a right to claim damages for its breach.
The two situations overlap, particularly where the issue upon which the case turns is the construction of the agreement on choice of court. In this chapter, the authorities referred to will include cases in which the application to the English court was for an anti-suit injunction. On questions of construction, validity, nature and scope of a contract term, the case law is essentially interchangeable.
And as rights come before remedies, grounds before relief, a court will need to answer any questions of construction, interpretation, validity, nature, personal scope and material scope of the parties’ agreement on place of litigation on which the application will turn. These questions or issues do rather run into one another, but in the account which follows they will be disentangled to the extent that it seems possible.
The courts have been careful to avoid equating a choice of English law to govern a contract as though it were a choice of English courts. If the parties have chosen a law to govern their contract, but have not specified a court as the one which is to have jurisdiction, the maxim of expressio unites, exclusio alterius may suggest that there was, and deliberately, no analogous agreement on choice of court. However, it can also be argued that a choice of law connotes, by necessary implication, a jurisdictional choice for any court which will apply that agreed-upon law to the issue in dispute. The matter is considered below.
Where there is a statutory obligation to give effect to a jurisdiction agreement, just as where there is with an arbitration agreement to which Arbitration Act 1996 applies, the common law analysis, which is otherwise used to shape the exercise of discretion by the court, is sidelined. The primary example is where the 2005 Hague Convention on Choice of Court Agreements requires an English court to give effect to an exclusive jurisdiction agreement for the courts of a Contracting State.
In this Chapter, therefore, the main enquiry will be on the common law principles which govern the validity, interpretation, et cetera, of jurisdiction agreements. It will not deal in detail with the 2005 Hague Convention, which as a form of statutory jurisdiction is examined in Chapter 25. It will not deal with the granting of injunctions to enforce such agreements, which will be found instead in Chapter 28. It will not deal with claims for damages for breach of contract where the contract broken is a jurisdiction agreement, for that is dealt with in Chapter 29. It will not deal with the non-recognition of foreign judgments by reason of a jurisdiction agreement, for which reference is made to Chapter 34. It obviously will not deal with the effect - the very different effect - of jurisdiction agreements in the context of the Lugano Convention, which was to be found in Chapter 12.
But it will deal with the common law principles governing stays of English proceedings sought and granted on the basis of an agreement for the jurisdiction of a foreign court: that is to say, the staying of English proceedings which have been commenced by service of process within the jurisdiction. That discussion commences at paragraph 23.15. Before we get there it is necessary to examine the nature and effect of agreements made by parties about their access to the jurisdiction of a court.
- [1] It appears that this expression is not to be found in any Roman law writing. According to some, it was Pope Gregory IX (1227-1241) who ascribed to the Synod of Carthage (348) the proposition pax servetur, pacta custodiantur (peace should be preserved, pacts respected). 2 If there is a choice of court for the English court, it will be rare, but will not be inadmissible, for a stay of proceedings to be applied for. For the possibility, see UBS AG v Omni Holding AG [2000] 1 WLR 916; Marubeni Hong Kong & China Ltd v Mongolia Government [2002] 2 All ER (Comm) 873; Sinochem International Oil (London) Co Ltd v Mobil Sales and Supply Corp [2001] 1 Lloyd’s Rep 670, 678-680; Standard Chartered Bank (Hong Kong) Ltd v Independent Power Tanzania [2015] EWHC 1640 (Comm), [2015] 2 Lloyd’s Rep 183. And for a case where a stay was actually ordered, see Bouygues Offshore SA v Caspian Shipping Co (Nos 1,3,4 and 5) [1998] 2 Lloyd's Rep 461, discussed further below. 3 [1987] AC 460, 480. 4 It is quite different under the Lugano Convention, where the legislation provides that certain types of jurisdiction agreement establish in law the jurisdiction of the court. 5 Only statute can define the conditions in which service does not establish the jurisdiction of the court (the Lugano Convention is now the most important such statute; until recently it was the Brussels Regulation); see also Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd [2019] NSWCA 61, [24].
- [2] Chapter 28, below. 2 Chapter 29, below. 3 MacSteel Commercial Holdings (Pty) Ltd v Thermasteel Canada Inc [1996] CLC 1403; BP Exploration Co (Libya) Ltd v Hunt (No 2) [1976] 3 All ER 879; The Elli 2 [1985] 1 Lloyd's Rep 107; Sawyer v Atari Interactive Inc [2005] EWHC 2351 (Ch), [2006] ILPr 8; Novus Aviation Ltd v Onur Air Tasimacilik AIS [2009] EWCA Civ 122, [2009] 1 Lloyd’s Rep 576; Ace Insurance Ltd v Moose Enterprise Pty Ltd [2009] N SWSC 724, [47]. 4 See further below, para. 23.19.
