Jurisdiction clause was held to be an exclusive English jurisdiction clause by the Court of Appeal where it provided for English law
The parties entered into a bill of lading which contained the following clause: "This Bill of Lading and any claim or dispute arising hereunder shall be subject to English law and the jurisdiction of the English High Court of Justice in London. If, notwithstanding the foregoing, any proceedings are commenced in another jurisdiction, such proceeding shall be referred to ordinary courts of law…."
The appellant argued that this was not an exclusive jurisdiction clause in favour of the English courts since it did not say that only the English court would have jurisdiction and indeed it recognised that proceedings may not be begun in England and made provision for that eventuality. That argument was rejected by the Court of Appeal. It held that this was an exclusive jurisdiction clause in favour of the English courts for the following reasons:
- The use of the words "shall be subject to" are imperative and directory and are not apt to provide for an option;
- The natural commercial purpose of a clause such as this one is to stipulate what law will govern and which court will be the court having jurisdiction over any dispute. If English law is mandatory, "the parties must…be taken to have intended (absent any convincing reason to the contrary) that the same should apply to English jurisdiction". In this case, some of the other countries which might have jurisdiction over a dispute might not apply English law or might apply it in an idiosyncratic way. It would make little commercial sense therefore to add England as an optional additional court.
- There was said to be "obvious sense" in making both English law and jurisdiction mandatory.
- The use of the phrase "notwithstanding the foregoing" recognises that the first sentence requires litigation in England. The second sentence applies where the first sentence is ineffective (eg because another country does not recognise the exclusive jurisdiction clause). In reaching this conclusion, the Court of Appeal drew a distinction with the situation where an insurance policy provides for English jurisdiction: that will not create an exclusive jurisdiction clause if it is only the insured (who may be foreign) who is likely to sue (see S&W Berisford v New Hampshire ).
COMMENT: This Court of Appeal decision comes close to saying that selection of English law in a jurisdiction clause will make the clause an exclusive jurisdiction clause in favour of the English courts, in the absence of a clear indication to the contrary. A similar stance was adopted by Waller J in British Aerospace Plc v. Dee Howard , who held that, by expressly agreeing English law, there would be no need to expressly agree that the English court should have jurisdiction as it would have non-exclusive jurisdiction anyway and so by expressly agreeing to English jurisdiction they must be seeking to add something, i.e. that the English courts should have exclusive jurisdiction.