Key Points

  • Agreement to submit to jurisdiction can be implied or inferred into a contract, but there must be actual agreement to submit. Circumstance (e.g. a contract being made in a particular country) is not enough to infer submission to jurisdiction.
  • Jurisdiction agreements apply to contracts, not insolvency office holder claims.

The Facts

Picard (as the trustee in bankruptcy of Bernard Madoff Investment Securities LLC (“BLMIS”)) obtained default judgment against Vizcaya in the New York court pursuant to anti-avoidance provisions in the US Bankruptcy Code. The trustee sought to enforce the judgment in Gibraltar, where Vizcaya had substantial assets. The trustee claimed that the New York Court had jurisdiction over Vizcaya because relevant agreements were deemed to be entered into and performed in New York, both parties’ bank accounts were based there, with both parties conducting activities in New York. Vizcaya appealed the lower courts’ decision to permit enforcement.

The Decision

The appeal was allowed. The Privy Council held that an agreement to submit to jurisdiction could be implied or inferred by fact or law (there does not need to be a written contractual term), but there does need to be actual agreement. Circumstance (e.g. a contact being made in a particular country) is not enough for there to be actual agreement to submit to a particular jurisdiction. Further, in the context of insolvency office holder claims, choice of law and jurisdiction agreements do not apply.

Comment

Although the Privy Council’s decision is not binding on the English court, it has persuasive value. The judgment clarifies the position under common law in relation to enforcement of judgments where no reciprocal enforcement treaties exist.

Vizcaya Partners Limited v Picard and another