When faced with competing jurisdiction clauses in agreements between the same parties, the English Court operates a ‘one stop adjudication’ presumption, assuming that as rational business people, parties are likely to have intended any dispute arising out of their relationship to be decided by the same tribunal1. This is to prevent inconsistent findings and increased costs, inconvenience and delay.
Two recent cases required the English Commercial Court to address circumstances where agreements between the same parties contained differing jurisdiction provisions and consider the application of the ‘one stop adjudication’ presumption.
In AmTrust Europe Ltd v Trust Risk Group SpA (10 December 2014), the parties had entered into a terms of business agreement (TOBA) as a schedule to a framework agreement. Both agreements concerned insurance broking arrangements in Italy. The framework agreement was subject to Italian arbitration and the TOBA was subject to the jurisdiction of the English courts.
Disputes arose between the parties and arbitration was commenced in Milan. The claimant alleged that funds had been misappropriated by the defendant and sought an injunction from the English Court pursuant to the dispute resolution clause in the TOBA. As the claimant was seeking an injunction, it was required to show a good arguable case that the Court had jurisdiction. The defendant challenged the Court’s jurisdiction.
The claimant succeeded. After very detailed consideration of the contractual provisions, the Court acknowledged the weight of the ‘one-stop adjudication’ presumption but ultimately concluded that both dispute resolution clauses operated and granted the injunction. This was primarily because the two agreements concerned different aspects of the parties’ business relationship. In particular, the judge was swayed by the claimant’s argument that the framework agreement made references sometimes to the “agreement” in the singular as opposed to the “agreements” in plural, which suggested that not all provisions in it were intended to apply to both. It was also significant that the agreements had been entered into at different times.
These principles should be kept in mind when annexing contracts to framework or master agreements.
The decision in Monde Petroleum SA v Westernzagros Limited (22 January 2015) confirms that where a settlement is agreed that relates to a previous contract between the same parties, the jurisdiction clause in the settlement agreement will generally supersede any previous clause entered into between the parties.
The parties had entered into a consultancy agreement (CSA) under which Monde was to provide services to assist Westernzagros in the exploration and production of oil in Iraq. The CSA contained an arbitration clause. A dispute arose and was settled by a settlement agreement, providing for the termination of the CSA upon payment of certain sums to Monde. The settlement agreement was subject to the exclusive jurisdiction of the English Court.
Monde subsequently alleged that it had entered into the settlement agreement following misrepresentation and duress by Westernzagros and commenced both court and arbitration proceedings. Westernzagros counterclaimed in the arbitration proceedings. The tribunal dismissed the counterclaim because the settlement agreement had significantly limited the scope of its jurisdiction to hear disputes relating to the CSA. Westernzagros appealed to the Court.
The Court noted that the presumption in favour of one-stop adjudication can be very strong where there is an agreement entered into for the purpose of terminating an earlier agreement between the same parties or settling disputes under an earlier agreement. Where the settlement/termination agreement contains a dispute resolution provision different from, and incompatible with, the dispute resolution clause in the earlier agreement, the parties are likely to have intended the settlement/termination agreement clause to supersede the clause in the earlier agreement, for a number of reasons:
- The settlement agreement came second in time and was agreed in light of the circumstances and disputes which gave rise to the settlement.
- The settlement agreement contains the only clause capable of applying to disputes arising out of it and governing issues concerning its validity and effect.
- The risk of inconsistent findings.
It concluded that where a terminating agreement contains a new dispute resolution provision which differs from the underlying agreement, the dispute resolution clause in the terminating agreement will supersede the earlier clause and apply to all disputes arising out of both agreements, subject to the actual language of the clause and other surrounding circumstances.
When faced with conflicting dispute resolution clauses, the English Court will begin with the ‘one stop adjudication’ presumption. However, the following principles should be borne in mind:
- Where related agreements address different aspects of the parties’ relationship, conflicting dispute resolution clauses can both be upheld.
- If a later agreement is a settlement agreement relating to a former agreement, the dispute resolution provision in the settlement agreement is likely to prevail.
- Care should be taken to define the scope of dispute resolution provisions and other provisions having an effect on the interpretation of previous agreements, such as ‘entire agreement’ clauses.