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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 [2002] 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[1903] 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'.

Izaz Ali is a commerical lawyer who specialises in information technology law and intellectual property law with an emphasis on IT, escrow and buying and selling online businesses.

About the Author

Lawdit Solicitors offer services and advice for litigation, commercial contracts, Intellectual Property and IT legal agreements. We are experts in commercial law with a heavy emphasis on Intellectual Property, Internet and e-commerce law. Lawdit is a member of the International Trademark Association, the Solicitors' Association of Higher Court Advocates and we are the appointed Solicitors to the largest webdesign association in the world, the United Kingdom Website Designers Association.

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Article Published/Sorted/Amended on Scopulus 2008-09-15 21:00:33 in Legal Articles

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