Asymmetric jurisdiction clauses and the Brussels Recast Judgments Regulation 2012

 

 

Asymmetric jurisdiction agreements are a long established and practical feature of international financial documentation. Under a typical asymmetric jurisdiction clause X (say a bank) and Y (say a borrower) agree that Y may sue X in the courts of jurisdiction A only but that X may bring proceedings against Y elsewhere. In Commerzbank Akt v Pauline Shipping and Liquimar Tankers [2017] EWHC 161 (Comm) the bank made various loans for ship purchase which were subject to guarantees on similar terms, including the provision of a clause for the benefit of the bank, conferring jurisdiction on the English courts. The borrowers defaulted and the bank exercised its rights to sell one of the vessels, the Adriadni. The guarantors brought proceedings against the bank in Greece, the first seeking orders that the guarantee of the loan was discharged and it was not liable to the bank, the second seeking damages from the bank in tort and under the Greek Civil Code for loss of the use of the Adriadni consequent on the arrest. The bank then brought proceedings in the English Court which the guarantors sought to stay under either art 29 or art 30 of the Recast Judgments Regulation.

 

Cranston J s held that the asymettric jurisdiction clause in the sale and guarantee contracts did confer exclusive jurisdiction on the English courts pursuant to art 31(2) of the Regulation.  Article 25 did not invalidate such clauses. Article 25 required the parties to have designated the courts of a Member State to enable the law applicable to the substantive validity of a jurisdiction clause to be identified and to provide certainty as to the forum in which a putative defendant can expect to be sued.  Article 25 did not require that a valid jurisdiction agreement had to exclude any courts, in particular non EU Courts. Accordingly, the Court refused to stay proceedings under Art. 29.

 

The Court also rejected an application to stay the English proceedings under Art. 30 concerning related proceedings. The agreement to an exclusive jurisdiction clause in favour of the English court was a powerful factor against a stay. In addition, the degree of relatedness between the English and Greek actions was very small and the English court was placed to determine the issue of interpreting and applying the jurisdiction clause.

 

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Professor Simon Baughen

Professor Simon Baughen was appointed as Professor of Shipping Law in September 2013 (previously Reader at the University of Bristol Law School). Simon Baughen studied law at Oxford and practised in maritime law for several years before joining academia. His research interests lie mainly in the field of shipping law, but also include the law of trusts and the environmental law implications of the activities of multinational corporations in the developing world. Simon's book on Shipping Law, has run to seven editions (soon to be eight) and is already well-known to academics and students alike as by far the most learned and approachable work on the subject. Furthermore, he is now the author of the very well-established practitioner's work Summerskill on Laytime. He has an extensive list of publications to his name, including International Trade and the Protection of the Environment, and Human Rights and Corporate Wrongs - Closing the Governance Gap. He has also written and taught extensively on commercial law, trusts and environmental law. Simon is a member of the Institute of International Shipping and Trade Law, a University Research Centre within the School of Law, and he currently teaches at Swansea on the LLM in:Carriage of Goods by Sea, Land and Air; Charterparties Law and Practice; International Corporate Governance.

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