Dispute resolution clauses: Litigation

In Axis Corporate v ABSA, the relevant contract provided for English law and then stated that "each party agrees to submit to the jurisdiction of England and Wales and to comply with all requirements necessary to give such court jurisdiction". The defendant argued that this clause did not provide for exclusive jurisdiction in favour of the English courts.

The defendant placed a great deal of emphasis on the distinction between agreeing to submit disputes to a certain court and agreeing to submit yourself to a certain court. There is prior caselaw to the effect that the former amounts to exclusive jurisdiction and the latter to non-exclusive jurisdiction.

But the judge in this case described that distinction as now "arcane" and found that the clause in question amounted to an exclusive English jurisdiction clause.

Here, the choice of English law was a factor in favour of an exclusive jurisdiction clause. Furthermore, the judge said, "Although there can be commercial advantages to non-exclusive jurisdiction clauses, there are in general greater commercial advantages to exclusive jurisdiction clauses, since they provide certainty and predictability to both parties".

The courts strove again, more recently, in AIG Europe v John Wood to construe a jurisdiction clause as exclusive, even though that term was not expressly included in the clause.

The clause in question stated that the contract "shall be governed and construed in accordance with the laws of England and Wales…and…the Commercial Court of the Queen's Bench Division High Court of Justice Strand London…shall have jurisdiction of any dispute under [this contract]".

The judge rejected an argument that this was a non-exclusive jurisdiction clause because it gave the parties the option of litigating in England, but did not require them to do so. He relied on earlier caselaw that noted that "there is only limited benefit in specifying England as an optional jurisdiction without any obligation on either party to litigate here". An important factor here was that a large number of other countries might potentially have jurisdiction (but it was hard to predict which would have jurisdiction with any certainty) and were likely not to apply English law, despite the terms of the clause, or might apply it in an "idiosyncratic way".