Non-exclusive jurisdiction – the intention?


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Non-exclusive jurisdiction clauses, often used by English lawyers, can have unfortunate results, as demonstrated by the Court of Appeal in Highland Crusader v The Deutsche Bank [2009] EWCA Civ 725.

The parties had standard form agreements which provided that they "irrevocably submit…to the jurisdiction of the Courts of England" but added that "Nothing in this paragraph shall limit the right of any party to take proceedings in the courts of any other competent jurisdiction".

The appellants issued proceedings in Texas, and then the respondents issued proceedings in England and asked the courts for an anti-suit injunction to prevent the appellants continuing in Texas. The respondents relied on the English court’s approach to exclusive jurisdiction clauses in which parallel proceedings in a non-contractual jurisdiction are regarded as vexatious or oppressive, unless they can be justified on the grounds of matters unforeseeable at the time of the contract or due to other exceptional circumstances.

The Court of Appeal confirmed that whilst it may restrain a defendant from instituting or continuing foreign proceedings when it was in the interest of justice to do so, and whilst it was also recognised that parallel proceedings were undesirable, they were not necessarily vexatious or oppressive, and the starting point was to consider the intention of the parties. By contracting for the non-exclusive jurisdiction, the parties must have anticipated and accepted the possibility of some parallel proceedings, and it was therefore not appropriate to grant an injunction. Comment: Whilst it is questionable whether the parties to a non-exclusive jurisdiction clause anticipate parallel proceedings, any doubt on the point could be resolved by specific wording prohibiting parallel proceedings, or by providing for exclusive jurisdiction, either generally or for the benefit of one party.

Paul Howcroft, Partner, Fladgate LLP (phowcroft@fladgate.com)

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