Jurisdiction home or away
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Released 5 September 2008
Agreeing the jurisdiction in any contractual matter is important especially
where the parties contracting are from different countries
Sabah Shipyard ( Pakistan ) Ltd v The Islamic Republic of Pakistan 
EWCA Civ 1643 (14 November 2002) is a case in point.
The Court of Appeal suggested that unless jurisdiction clauses are carefully
drafted to achieve the desired effect of creating in a given jurisdiction
exclusivity (if, indeed, that is desired),the court would not infer that such
exclusivity existed. This is very important.
The Jurisdiction Clause in Sabah Shipyard read as follows: 'Each party hereby
consents to the jurisdiction of the Courts of England for any action filed by
the other Party under this Agreement to resolve any dispute between the Parties
and maybe enforced in England'. (Clause 1.9.1).
The court had to address the issue as to whether Clause 1.9.1 was an
exclusive jurisdiction clause so as to make it a breach of contract for either
party to bring proceedings in any other court but that of England. It was argued
by the claimant that it was exclusive in that sense. The claimant sought to rely
on the judgment of the Court of Appeal in Austrian Lloyd Steamship Company v
Gresham Life Assurance Society Ltd 1 KB 249 as its authority for
this.Waller LJ in Sabah Shipyard took the view that Clause 1.9.1 was not
exclusive not only because it did not employ the word exclusive, but also
because it did not lend “itself to a transitive construction”. Clause 1.9.1
showed that the parties had intended to agree to submit to the jurisdiction of
the English Courts, but not that there should be a contractual obligation not to
have any recourse to any other court.
It is therefore vital that contracts with international elements are clear on
the point of jurisdiction. If the parties to the contract wish the English
courts alone to be the forum of dispute resolution they must use the word
‘exclusive’ and/or demonstrate clearly that the parties agree to submit all
disputes arising under the agreement to the jurisdiction of the English courts.
It is not enough that a jurisdiction clause merely shows an intention to agree
to submit to the jurisdiction of the English courts.
A suitable clause could be something along the lines of: 'The parties to this
agreement agree to submit all disputes arising under this agreement to the
exclusive jurisdiction of the courts of England and Wales'.
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Article Published/Sorted/Amended on Scopulus 2008-09-15 21:00:33 in Legal Articles