9. jurisdiction clauses that are exclusive for one party but non-exclusive for the other). The Cour de Cassation considered such clause to be contrary to the objective and aim of the prorogation of jurisdiction offered by Article 23 of the Brussels I Regulation because of its potestative nature. Your email address will not be published. This is the first case in which the Court of Justice of the EU (the Court) has the opportunity to address the concept of a significant impediment to affect competition (SIEC) based on non-coordinated effects, including the standard of proof required by the European Commission (the Commission) to be met and the scope of review by the Court. Question 7 . The Bank appealed unsuccessfully to the Cour de Cassation which held that the clause was contrary to Article 23 because of its potestative nature. However, recent cases have broadened the potential scope of this issue. Unilateral option clausesreview of selected jurisdictions Practice notes Maintained Found in: Arbitration This Practice Note sets out the position taken by the court's of key jurisdictions to unilateral (one-sided or non-mutual or asymmetrical or sole) option clauses. One-Way, Unilateral, or Asymmetrical Jurisdiction Clauses In Dyna-Jet Pte Ltd v Wilson Taylor Asia Pacific Pte Ltd [2017] SGCA 32(Dyna-Jet), the Singapore Court of Appeal found a dispute resolution clause which conferred on one party only the right to elect to submit disputes under the contract to arbitration to be legally valid. In this case, Apple Sales Ltd (Apple), an Irish company in the Apple Computers group, signed an agreement with a French reseller containing the following clause: This Agreement and the corresponding relationship between the parties shall be governed by and construed in accordance with the laws of the Republic of Ireland and the parties shall submit to the jurisdiction of the courts of the Republic of Ireland. Your client, on the other hand, will be permitted to bring proceedings in England, or in any other country which has jurisdiction under its own jurisdiction rules, so it can pick where to sue at the time the dispute arises. CIVIL PROCEDURE SPECIFIC JURISDICTION - CLASS NOTES MOST RELEVANT CASES [SPECIFIC JURISDICTION] Specific jurisdiction pertains to lawsuit arising out of the contacts between defendant and the state [relatedness] Gray (heater - broad interpretation - putting a product in the <stream of commerce= is enough to expect of being sued in a state where a product could be potentially brought . In fact, the decision of the Cour de cassation seems to result from philosophical and sociological rather than purely legal considerations. 3. Finally, given the strength of the arguments for upholding unilateral jurisdiction agreements - many of them advanced by the bank - it hard to see . Such a clause is subject to Article 23 of the European Regulation n44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Bruxelles I Regulation), not to French law. Parties should consider the impact of these clauses should a dispute arise The dispute resolution team has recently seen an increased use of asymmetrical jurisdiction clauses (also known as unilateral jurisdiction clauses) in commercial contracts. Required fields are marked *. Where a clause is considered void, arguments may be raised that enforcement would be contrary to public policy (although in EU member states the judgment creditor may be able to rely on Article 35(3) of the Brussels Regulation which states that the test of public policy may not be applied to the rules relating to jurisdiction). o International Court of Justice: First step: access to court (recognised states) Second step: jurisdiction on the specific dispute (treaty, compromise, compromissory clause, prorogatum) o Secretariat: administrative work, headed by Secretary-General There is no real checks and balances but they do support each other and there are institutional . Such jurisdiction shall be exclusive unless the parties have agreed otherwise., Without any reference to a legal basis, the Cour de Cassation upheld the decision of the Court of Appeals that, having noted that the jurisdiction clause forced the eBizcuss company to bring an action before the Irish courts while it reserved the right for the other party , as an option, to bring an action before another court, had ruled that this clause, which allows the identification of the courts to which may be referred any dispute arising out of the performance or interpretation of the contract, meets the predictability objective that any jurisdiction clause must meet.. The English courts have no problem with such clauses (see Mauritius Commercial Bank Ltd v Hestia Holdings Ltd). This post is part of the following categories: It is not uncommon, particularly in a finance context, for an agreement to give a wider choice to some parties than others to decide where disputes will be resolved. However, such clauses always provide for an option to only one of the parties allowing it to choose the court that will be competent in case of a dispute. This Premier and this government will not listen unless we show up. Attorney Advertising. Where a dispute has arisen, parties with the benefit of a unilateral jurisdiction clause should bear in mind in deciding where and when to begin proceedings that the opposing party may (in certain jurisdictions) have a wider choice of where to litigate or arbitrate than appears to be the case. Further, amendments to the Brussels Regulation (if they are brought into effect as suggested) provide that the law of the court chosen in the clause will apply to the substantive validity of the clause, which in this case would point to Luxembourg rather than French law. Asymmetric jurisdiction clauses are commonplace in financing documents, such as loan agreements and guarantees. On December 6, 2022 the Financial Reporting Council (FRC) published a Feedback Statement which provides an analysis and explanation of the responses received to a consultation the FRC launched in June 2022 on the public reporting of firm-level Audit Quality Indicators (AQIs). One commenter provided proposed text for a section addressing the effective date and grandfather clause. In particular they have called into doubt the effectiveness of such clauses in France and Russia and they have broadened the issue to any aspect of inequality, including unilateral jurisdiction clauses (ie. An asymmetric clause allows one party (typically a lender) to sue another party (typically a borrower) in any jurisdiction but restricts the borrower to sue in only one exclusive jurisdiction. Unilateral (or asymmetrical) jurisdiction clauses may vary in form and nature. The benefits of a unilateral jurisdiction clause. The Full Faith and Credit Clause of the United States Constitution (Art. All Rights Reserved. Such a connection would include any party to the contract being domiciled in France or any obligations under the contract being performed in France. One change in the Recast Regulation is that a jurisdiction clause must meet not only the formal requirements of the Regulation but also that it must be valid under the law of the Member State whose courts have been designated by the parties. The Cour de Cassation would be legitimate to disregard a unilateral jurisdiction clause under French law. We need to fill the Legislature with hundreds of people yelling at Danielle Smith to withdraw the Alberta Sovereignty Act. So, in theory, its all good news for your client. . The most recent decision (Apple) suggests that a unilateral clause will be upheld where it is possible to identify objectively which courts might have jurisdiction in the case of a dispute (so the clause in that case was upheld, as proceedings could only be brought where the other party had its registered office or where any loss caused by the other party was suffered). England is likely to be the most convenient place for reasons such as location of documents and witnesses and familiarity with court processes. that a unilateral jurisdiction clause was void on grounds similar to the reasoning of the French Supreme Court - see section 3 of this paper for a discussion of the French Supreme Court's decisions. After the respondent left, a new deed was constituted and the . [6] The Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters determines jurisdiction between EU Member States and Switzerland, Norway and Iceland. 213.305-3 Conditions for use. Brussels I Regulation is supposed to apply uniformly in all the Member States of the European Union and only the European Court of Justice (ECJ) is competent to interpret its provisions by reference to autonomous concepts of European Union law. Such clauses give flexibility, and allow a party to take a view when the dispute arises on where it is most advantageous to have the dispute determined, usually in terms of enforcing any judgment or award. Singapore Journal of Legal Studies, 261-273. In particular, this enables the lenders to take action against the borrower wherever its assets are located, in order to facilitate enforcement. . The aftermath of recent Kenyan elections has been marred by violence and an apparent crisis in democratic governance, with the negotiated settlement resulting from the 2007 election bringing into sharp focus longstanding problems of state and society. Authors Stephen Moi Mark Stefanini Bylined article by London Commercial Dispute Resolution partner Mark Stefanini and senior associate Stephen Moi on unilateral jurisdiction agreements. And then, having decided the governing law, it must then decide whether the clause is valid according to that governing law. In the commented case, eBizcuss, an authorized reseller of Apple products, had entered into a contract with Apple Sales International, which included the following jurisdiction clause : The company eBizcuss shall bring any claims arising from the present contract before the Irish Courts, while Apple reserves the right to bring such claims before the competent courts of its own choice and those shall be either the Irish Courts, or the Courts of the State where eBizcuss is headquarted, or the Courts of the State where the tort occurred. As noted, the Parties' "agreements" are not mentioned in the operative clauses (Judgment, para. Unilateral jurisdiction clauses (also known as hybrid, one-way or one-sided clauses) are very common, as they afford the party in whose favour they operate flexibility on jurisdiction. The Cour de cassation held that the lower court reached its conclusion without considering whether the imbalance criticized by the borrower namely, that the clause granted the bank the right to bring proceedings before any other competent tribunal but did not specify the objective basis on which this alternative jurisdiction was founded was contrary to the objectives of foreseeability and legal certainty underpinning the Lugano Convention. 1 (2014): 19. The Cour de Cassation applied the ruling of the European Court of Justice in the recent Cartel Damages Claimscase: With respect to anti-competitive practices, a jurisdiction clause is applicable provided that it refers to disputes concerning liability incurred as a result of an infringement of competition law. Question 8 A contract . For many years, the advice in certain jurisdictions in emerging markets has been to avoid clauses which provide for a unilateral option to arbitrate or litigate and to opt instead for arbitration only clauses which will have the best chance of enforcement. United Kingdom | On 26 September 2012, the French Supreme Court in civil and commercial matters decided that a jurisdiction clause in a contract providing for a competent forum, but which allowed one of. Decisions in a number of countries, including France, Russia and China, have cast doubt on the effectiveness of at least some types of unilateral clause. Unilateral jurisdiction clauses: One way or no way? UNILATERAL VARIATION OF CONTRACT. this article presents a study of the so-called 'unilateral' ('optional', 'hybrid') jurisdiction clauses combining arbitration and choice of court options, which business tends to favour as such clauses seek to designate a method of dispute resolution that provides a more favourable position for one of the parties to an agreement and ensure better We use cookies and other similar technology to collect data about you to allow us to deliver our online services, measure our website audience and improve your browsing experience. When asked about the meaning of the terms have agreed set forth in Article 23 of Brussels I Regulation, the ECJ specified that this Article does not mean that it is necessary for a jurisdiction clause to be formulated in such a way that the competent court can be determined on its wording alone, but simply that it is sufficient that the clause state the objective factors on the basis of which the parties have agreed to choose a court or the courts to which they wish to submit disputes which have arisen or which may arise between them. Many commentators argued that the effect would be limited to such situations. It seems clear that a clause which gives the beneficiary of the clause an unlimited choice, subject only to a countrys own jurisdiction rules, will not be considered valid in France (Rothschild and Credit Suisse). Finally, give some thought to whether there are likely to be any problems enforcing a judgment (or arbitration award) where the defendants assets are located (either currently or where the defendant may move its assets in future). [1] 1st Civil Chamber of the Cour de Cassation, October 7, 2015, n14-16898. Prosecution of Judges and public servants Defence of India Act, 1962 General Clauses Act, 1897 Government of India Act, 1935 Gwalior Hindu Succession Act, 1956 Income Tax Act, 1961 Indian Independence Act, 1947 States Reorganisation Act, 1956 Wealth Tax Act, 1957. A costs lawyers guide to the SCCO during COVID-19, Who will the court believe? The Cour de Cassation held that the jurisdiction clause permitted the identification of jurisdictions before which an action could be brought with respect to the performance of the contract, and therefore complied with the requirement of predictability with which jurisdiction clauses must comply. Russia then of course, presented their case objecting to the jurisdiction of the court. The Mayer Brown Practices and Mayer Brown Consultancies are established in various jurisdictions and may be a legal person or a partnership. Today, thanks to our advocacy and our relentless fight she rollbacked . Restitution clause . In the present petition, the parties entered into a partnership deed which had an arbitration clause. There seems no reason why a judgment under a clause which gave parties wider rights than they appreciated they had, ie where the clause would have been equalised, should be affected. These hopes have been somewhat dashed by a new case decided by the Cour de cassation. Have you ever had a legal tech implementation project that has gone terribly wrong? The Option was registered, at HM Land Registry, as a unilateral notice against the freehold title number NGL748122. Any party to a contract with a connection to France must be aware of the fragility of such clauses. Kunwar Shri Vir Rajendra Singh Vs. On 15 March 2015, the French Supreme Court held that a unilateral jurisdiction clause entered into between a French company and a Swiss bank was invalid under the Lugano Convention (which is substantially the same in relevant respects to the Regulation and the Recast Regulation). Considering the Cour de Cassation case law, it is preferable to not use a unilateral jurisdiction clause unless it is an absolute necessity. Apples right to sue the reseller was limited to the courts of the resellers corporate seat (in this case France) or any jurisdiction where harm to Apple is occurring. If you are a lawyer or work in a legal capacity, please register for a free trial to see if Practical Laws resources are right for your business. Rather than invalidate the entire clause, the effect of the ruling was that the unilateral option was converted into a bilateral option. Understand the extent to which contracts made by mentally ill persons are voidable, void, or effectively enforceable. A unilateral jurisdiction clause is therefore an advantage given to the lenders since they may only be sued by the borrowers in their home jurisdiction whereas they can start proceedings against the borrowers in any country which will accept jurisdiction. On December 8 2022, Tammy Heydenrych, Legal Operations Consultant, will be speaking at the Legal Design & Innovation Summit, sharing how to avoid the common pitfalls when selecting and adopting tech, based on her own experience in-house and working with global legal teams on transformation projects. Furthermore, even if they do apply to jurisdiction clauses, the party who binds himself is the party who is bound to take action only in a specific jurisdiction and accordingly the potestative condition is not undertaken by him but by the other party to the contract. our article entitled Recast of the Brussels I (European) regulation published on our Blog in December 2012: https://www.soulier-avocats.com/en/blog/recast-of-the-brussels-i-european-regulation/. So, is it worth the risk of having a unilateral clause? Please use our search or the navigation menu to find the content that you are looking for. There has always been some doubt over whether clauses which give unilateral rights would be given effect in all jurisdictions. Its decision remains highly controversial. In fact, reservations provide for the flexibility which many States consider essential in accepting the compulsory jurisdiction of the International Court of Justice. The unilateral clause therefore provides flexibility and prevents a problem arising because a defendant has moved its assets. jurisdiction of the United States (but not including leased bases). This limitation may be what enabled the Cour de Cassation to determine that the clause permitted the identification of jurisdictions before which an action could be brought with respect to the performance of the contract and so was sufficiently predictable. It all depends: the risk is not the same in every contract, and nor are the benefits. Your email address will not be published. These are all possible connecting factors which a court might consider to justify it in taking jurisdiction. December 08, 2022. If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Having identified those jurisdictions (or as many as you can), check what their stance is in relation to unilateral clauses. So if your client is an English company, a typical clause will give exclusive jurisdiction to the English court in any proceedings commenced by the other party. Another alternative, if it is commercially practicable, is to use a hybrid arbitration clause rather than a unilateral jurisdiction clause these clauses have previously been upheld by the Cour de cassation. For example, an agreement may provide that the courts of a particular country have exclusive jurisdiction, but some of the parties, such as the lender, can instead opt to bring proceedings in another jurisdiction, and/or refer the dispute to arbitration. This decision was widely reported and criticized. The Department has added requiring State court jurisdiction over tort claims arising . The facility agreement contained an asymmetric optional arbitration clause in which it was provided that any of the finance parties (not Aiteo or shareholders in Aiteo) " may elect to refer " disputes under the agreement to London-seated ICC arbitration or alternatively to a court of law. It is within this context that the Cour de Cassation issued its ruling in the eBizcuss case. Counsel agreed that, for the court to have jurisdiction, in this case, to grant relief from . This avoids the criticism of uncertainty which was the main argument used by the Cour de cassation. According to the Court, those objective factors must be sufficiently precise to enable the court seized to ascertain whether it has jurisdiction, and may, where appropriate, be determined by the particular circumstances of the case.[7]. this article presents a study of the so-called 'unilateral' ('optional', 'hybrid') jurisdiction clauses combining arbitration and choice of court options, which business tends to favour as such clauses seek to designate a method of dispute resolution that provides a more favourable position for one of the parties to an agreement and ensure better Clause 5 is exercisable only if there . This objection was sustained by the lower court but, on appeal, the Cour de cassation reversed the result. If this is not the case, the clause will, it seems, be likely to be void and jurisdiction in France will depend upon the usual rules as to jurisdiction, as set out in the Brussels Regulation for cases within the Regulation and domestic French law in other cases. 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. It also remains to be seen what, if any, effect these decisions will have where enforcement is sought of judgments or arbitration awards where jurisdiction has been assumed under the provisions in a one way-clause. These various unilateral possibilities give flexibility to the lender to bring proceedings in a jurisdiction where the defendants assets are located, or to refer the dispute to arbitration if proceedings have been commenced in a different EU jurisdiction than the agreed EU jurisdiction with a view to delaying judgment (so-called torpedo actions) or if there may be enforcement risks with a court jurisdiction clause, as is often the case outside the EU, and particularly in emerging markets. Where an option to arbitrate is included, it also opens up the possibility of countering an attempt by another party to bring proceedings in a different EU court than the agreed EU forum in an attempt to delay judgment against that party (so called torpedo actions). First, it must determine whether the jurisdiction clause is valid under the Recast Regulation. Journal of International Arbitration 31, no. Given, however, the differing reasoning adopted by the French Supreme Court in each case, it is by no means certain that such clauses will always be effective, so caution is required. A good starting point, I would suggest, is: If there were no jurisdiction clause, which country or countries would be likely to have jurisdiction under their own jurisdiction rules?. 213.302-5 Clauses. PGI 213.302-3 for guidance on the use of unilateral modifications. However, it was questionable as to whether Article 31(2) applied where the jurisdiction clause was a unilateral jurisdiction clause, i.e. Recognize that contracts made by intoxicated persons may be voidable. As an English company, your client will usually choose to sue in England. EXCEPTION: The enforcing court may always inquire as to whether the rendering state had jurisdiction in the original action and refuse . In its simplest form, such a clause requires the other party to bring proceedings in one country only usually where your client is based while your client has a choice of where to sue. 4. Iv 1) requires the courts of each state to honor the judgments of other states by entering judgments upon them and allowing out-of-state creditors to use court process to collect them. Recently, the Supreme Court has adopted a landmark judgment regarding the enforcement of ICSID awards in Ukraine, which is set to change judicial practice going forward. Where a dispute has arisen, parties with the benefit of a unilateral jurisdiction clause should bear in mind when deciding where and when to begin proceedings that the opposing party may have a wider choice of where to litigate or arbitrate than appears to be the case. Other options than asymmetry should be considered when drafting a jurisdiction clause. Before including a one-way jurisdiction clause in a contract, parties may wish to obtain local law advice on how such a clause would be viewed, ie take advice in countries likely to have jurisdiction over a dispute, whether under the terms of or absent the clause, and in countries where any judgment or award may need to be enforced. 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