In Winnetka Trading Corp v Julius Baer Int Ltd and another – Butterworths Law Direct 12.2.09 the Claimant was a Panamanian company. The first Defendant bank operated through the second Defendant bank, which was a branch in Guernsey. On 29 December 2005, the Claimant and the second Defendant entered into a bank account mandate. By cl 26 of the General Banking Conditions, the mandate was to be governed by and construed in accordance with the laws of Guernsey. Further agreements contained a governing law clause which provided that: 'The mandate between the client and the bank including these terms and conditions shall be governed by the laws of the island of Guernsey and the client and the bank hereby agree to submit to the jurisdiction of the Royal Court of Guernsey'.

When the Claimant commenced proceedings against the Defendants, the second Defendant successfully sought an application in the Royal Courts of Guernsey for an 'anti-suit injunction'. Following the making of that order, the Defendants applied for an order that the court should generally stay the English proceedings on the basis that, on its true construction, and having regard to the choice of Guernsey law and the fact that the Guernsey courts had exclusive jurisdiction to determine all disputes arising out of the agreements relied on, the English courts had no jurisdiction.

The Chancery Court granted the application. Consideration was given to the fact the parties had freely negotiated a contract providing for the non-exclusive jurisdiction of a particular court, thus creating a strong prima facie case that that court was the correct one in which to conduct disputes. Further, as a policy of the English law, parties would be held to their contractual choice unless there were overwhelming or at least very strong reasons for departing from that approach. When considering the overwhelming or very strong reasons, the English courts would not take account of factors of convenience that had been foreseeable at the time that the contract had been entered into, save in exceptional circumstances which involved the interests of justice.

It was clear that art 23 of the Regulation could have no direct application to a clause choosing the courts of a non-member state. It followed that the court should be entitled to give such effect to the agreement for the courts of a non-state as was allowed by its own rules of the conflict of laws. The terms of art 2 could not deprive competent parties of their autonomy in agreeing which court should have the jurisdiction to determine their disputes.

The stay would be granted only on terms that the Defendants undertook to the court (a) not to object to any application by the Claimant for the trial of a preliminary issue in Guernsey as to whether the jurisdiction clauses were incorporated in any relevant contract; and (b) not to assert that the mere commencement of such proceedings by the Claimant in order to obtain the determination of a preliminary issue itself amounted to a submission by the Claimant to the Guernsey Courts which precluded it from thereafter arguing in favour of English jurisdiction.