Two recent decisions clarify two important jurisdictional rules.

Jurisdiction agreements specifying courts of a non EU state

In C-175/15, Taser International Inc. v SC Gate 4 Business SRL [2016] E.T.M.R. 28 ("Taser v Gate 4") the Court of Justice of the European Union ("CJEU") was asked to decide whether Article 24 of the Brussels I Regulation (now Article 26(1) Brussels I Regulation (Recast) is applicable when a clause gives exclusive jurisdiction to the courts of a non-member state (in this case the USA). Article 24 provides that a court of a Member State before which a defendant enters an appearance (usually by acknowledging service of a claim) shall have jurisdiction. The CJEU confirmed that Article 24 is applicable even when exclusive jurisdiction has been conferred by agreement on the courts of a non-member state. (The rule is the same where the jurisdiction clause is in favour of the courts of a member state.)

Non exclusive jurisdiction with "forum non conveniens waiver"

Standard Chartered Bank (Hong Kong) Ltd v Independent Power Tanzania Ltd [2016] EWCA Civ 411 ("Tanzania") concerned a non-exclusive jurisdiction clause accompanied by a forum non conveniens ("FNC") waiver. An FNC waiver seeks to prevent the contracting parties from objecting to another's choice of court on FNC grounds (e.g. inconvenience, excessive expense, oppression). In terms of the Court's ability to depart from the parties' choice of forum, the "non-exclusive with FNC waiver" - type clause lies somewhere between exclusive and non-exclusive jurisdiction clauses (see Deutsche Bank AG v Sebastian Holdings Inc. [2009] EWHC 3069 (Comm)).

There has for some time been divergent authority on whether English Courts are bound to apply an FNC waiver. Most decisions favoured the view that a non-exclusive jurisdiction clause and an FNC waiver should not prevent the court from staying proceedings on FNC grounds, provided that the defendant can show very strong or exceptional reasons for the stay which were unforeseen at the time of entry into the contract. On the other hand, however, Clarke LJ (in National Westminster Bank v Utrecht-America [2001] EWCA Civ 658) concluded that a non-exclusive jurisdiction clause coupled with an FNC waiver would preclude completely any application for a stay on FNC grounds. The other members of the Court agreed.

The doubt seems now to have been eliminated. In Tanzania at first instance, Flaux J concluded that Clarke LJ's remarks in Utrecht were obiter and non-binding, and preferred the contrary view that "even where there is an FNC waiver with a non-exclusive jurisdiction clause, if very strong or exceptional grounds for granting a stay are demonstrated, the Court may in an appropriate case grant a stay, provided that the grounds in question can properly be described as unforeseen and unforeseeable as the time the agreement was made" ([109]). He went on to dismiss the application for a stay. The Court of Appeal dismissed an appeal against Flaux J's decision. They did not need to engage with the respondent's argument, as they decided the appeal on other grounds, but nevertheless accepted Flaux J's statement of the law "for present purposes".

The Tanzania decision is a reminder that the parties to a non-exclusive jurisdiction clause may not always be able to rely on an FNC waiver to prevent a stay on FNC grounds. It seems to have settled the uncertainty created by the Utrecht decision.

Parties to a contract should carefully consider the grounds on which they might potentially want to derogate from a non-exclusive jurisdiction provision at the outset, and, if possible, seek to deal with them in the agreement.

Contact Duncan Henderson and Oliver Millerchip