The Court of Justice of the European Union (CJEU) recently provided helpful clarification on
the validity of certain asymmetric jurisdiction clauses as a matter of EU law, responding to
questions referred by the French Court in Società Italiana Lastre SpA (SIL) v Agora SARL.
However, the CJEU's decision is limited to asymmetric jurisdiction clauses which refer disputes
to the court of a Member State of the EU or a party to the Lugano Convention (being the EU,
Denmark, Iceland, Norway and Switzerland).
An asymmetric jurisdiction clause is a type of dispute resolution clause which restricts one
party to initiating legal proceedings in only one specified jurisdiction and gives another party
the freedom to initiate legal proceedings in a variety of jurisdictions. Asymmetric jurisdiction
clauses are often found in financial transactions, where the finance parties are often given
greater flexibility over where any dispute is litigated.
In this case, the jurisdiction clause in question gave the court of Brescia (Italy) exclusive
jurisdiction, save that SIL reserved the right to bring proceedings before 'another competent
court in Italy or elsewhere'. Agora issued proceedings in France and challenged the validity of
the asymmetric jurisdiction clause, which restricted it to bringing claims in the court of Brescia
only. SIL subsequently challenged the jurisdiction of the French court on the grounds of the
asymmetric jurisdiction clause. The French courts rejected the challenge but referred certain
questions to the CJEU.
The first question for the CJEU was whether a determination as to whether an asymmetric
jurisdiction clause is 'null and void as to its substantive validity' should be made pursuant to: (i)
the autonomous criteria of Article 25 of Regulation (EU) No 1215/2012 ("Brussels Recast"); or
(ii) the law of the Member State of the court designated by the clause. The CJEU held that it
should be the former.
The second question for the CJEU was whether an asymmetric jurisdiction clause is valid
under Article 25 of Brussels Recast. The CJEU held that such a clause may be valid provided
that the clause:
-
designates the courts of one or several EU Member States or parties to the Lugano
Convention
-
identifies objective factors which are sufficiently precise to enable the court seised to
ascertain whether it has jurisdiction
-
respects parties' freedom of choice and complies with Articles 15, 19, and 23 of
Brussels Recast (which provide protections for weaker parties in specific contract
types) and does not contravene exclusive jurisdictions under Article 24 of Brussels
Recast.
In making this judgment, the CJEU did not give any guidance as to how a reference to
'competent courts' should be interpreted, although noted that if the wording ‘another competent
court… elsewhere’ also designated one or several courts of one or more countries which are
not EU Member States or parties to the Lugano Convention, it would be contrary to Brussels
Recast. In such a case, the clause would be inconsistent with the objectives of foreseeability,
transparency and legal certainty pursued by Brussels Recast because EU law would not apply
to designate the courts with jurisdiction – that would depend on the rules of private
international law of third countries.
Whilst the judgment therefore helpfully confirms that asymmetric jurisdiction clauses which
comply with the three conditions referred to above are valid as a matter of principle under EU
law, the position as to the validity of asymmetric jurisdiction clauses which are not expressly
limited to EU Member States and/or Lugano Convention States as a matter of EU law remains
unclear. If a party sought to bring proceedings in a court of an EU state under an asymmetric jurisdiction clause of this nature, it is unclear whether the clause would be considered valid or not. If held to be invalid, then general rules of jurisdiction under Brussels Recast would apply, and factors such as where the parties are domiciled will be important. In that situation, the party with a choice of jurisdiction may wish to pre-emptively issue proceedings in the non-Member State jurisdiction, so that a Member State court can stay proceedings under Articles 33 and 34 of Brussels Recast in favour of the court first seised.
Caution must therefore still be taken when drafting asymmetric jurisdiction clauses and parties should weigh up the benefit of greater certainty of enforceability of an exclusive jurisdiction clause against the flexibility of an asymmetric jurisdiction clause.
