Cross–border issues and disputes: Jurisdiction, forum selection and parallel proceedings
The French Supreme Court has ruled that a jurisdiction clause providing for exclusivity for the benefit of one party only is contrary to the object and purpose of Article 23 of the Brussels I Regulation, and is therefore invalid (Ms "X" v Banque Privée Edmond de Rothschild, No 11-26.022; 26 September 2012).
The decision will be of considerable concern to commercial entities – and in particular to banks. Even if the Court of Justice of the EU ultimately disagrees on the issue, it raises the prospect of uncertainty and confusion in the meantime, throughout EU and Lugano States.
Summary top tips on jurisdiction clauses providing for "one-way" exclusivity:
- When drafting, consider whether such a clause will be upheld - not only by the chosen court, but also by other courts in which proceedings might be commenced or which might refuse to enforce a judgment of the selected court. If they might not consider the clause to be valid, it may be better to make it exclusive for both parties.
- Ensure that your preferred court within EU/Lugano is "first seised" of any dispute which is subject to such a clause (especially if there is a French nexus). Currently, it will be that court which will determine the validity of the clause – and some States (e.g. the UK) are more likely to uphold it than others.