July 26, 2016

Applying a commercially sensible construction to a jurisdiction clause expressed to be non-exclusive, but also “for the benefit of” a party, the High Court found that those words alone did not mean that the clause should be interpreted as an exclusive jurisdiction clause for the purposes of Article 25 of the Recast Brussels Regulation (1215/2012/EU).

The relevant clause, in a letter of engagement between the defendant Spanish company and the claimant English limited liability partnership, provided as follows:

“[The Defendant] agrees for the benefit of [the Claimant] that the courts of England will have non-exclusive jurisdiction to settle any dispute which may arise in connection with this engagement”.

The issue turned on the application of Article 25 of the Regulation, which provides that where parties, regardless of domicile, have agreed that a Member State should have jurisdiction, “such jurisdiction shall be exclusive unless the parties have agreed otherwise…”

According to the claimant the parties had not “agreed otherwise” since the words “for the benefit of” meant that the jurisdiction clause provided for exclusive jurisdiction at its option with the defendant required to bring any claim in the English court.

It was common ground that what “exclusive jurisdiction” required under the Regulation was that the agreement not only conferred jurisdiction upon the court of a Member State, but also that it debarred the restricted party from invoking the jurisdiction of courts of other Member States.

Mr Justice Walker considered that the words used by the parties and the absence of words normally to be expected when exclusivity is sought pointed to there being a lack of concern about parallel proceedings.  Taken on its face, the judge considered that the language used did not indicate that the benefit to be conferred upon the claimant was an entitlement to insist that the defendant must regard itself as bound by the exclusive jurisdiction of the English court.  It would have been “simplicity itself to state so”.

There was nothing, in the judge’s view, in the jurisdiction clause that indicated that the benefit to the claimant was to go beyond enabling it to invoke the non-exclusive jurisdiction of the English courts.  The claimant’s interpretation failed to take account of the fact that the clause undoubtedly did confer a benefit upon it of being able to invoke the English court’s jurisdiction and in the absence of that clause there could be no certainty that it could invoke the jurisdiction of the English courts under the Recast Brussels Regulation (Perella Weinberg Partners UK LLP v Codere SA [2016] EWHC 1182 (Comm) (17 May 2016) – to read the full judgment click here).