CC business
Do all jurisdiction clauses apply? It is prevalent for agreements of a commercial nature to contain a jurisdiction clause, particularly when the parties or entities concerned would be operating on an international level.
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he term ‘jurisdiction’ refers to the authority given by law to a court to hear and decide legal disputes within a particular geographic area and/or over certain types of legal cases. A jurisdiction clause, also known as a dispute resolution clause, identifies how and where disputes arising from the agreement (if any) are to be determined. When parties decide to include a jurisdiction clause at the outset of an agreement, it is important to ensure that the way the jurisdiction clause is worded clearly outlines the intention of the parties and would not create difficulties of interpretation. Formulating a jurisdiction clause which poses difficulties of interpretation could result in the parties having to enter costly and lengthy legal proceedings purely based on determining whether the court has jurisdiction to hear the dispute. It is only after the jurisdictional issue is resolved that the parties would be able to institute proceedings for the court to determine the matter of contention between the parties.
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A delay in these circumstances could result in the aggrieved party suffering additional losses. Jurisdictional conflicts are regulated by both national and international legal instruments. When a commercial and civil matter arises in a European context, it is the Recast Brussels Regulation (No. 1215/2012) on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters that applies. This regulation has direct effect in all European Union member states except for Denmark. Its purpose is to lay down rules of jurisdiction which are highly predictable and facilitate the sound administration of justice. Excluded from this are matters relating to status or legal capacity of natural persons, bankruptcy or the winding-up of insolvent companies, social security issues, arbitration, maintenance obligations or wills and succession. The regulation provides that jurisdiction is generally based on the defendant’s domicile. The domicile of an individual, in layman
terms, is the country a person treats as their permanent home, or in the commercial context, the place where a company or other body is registered. Apart from the defendant’s domicile, the regulation allows for alternative grounds of jurisdiction, such as the constitution of a jurisdiction clause. Article 25 of the regulation states that parties to a contract can agree that a court or courts of a member state have jurisdiction to settle any disputes which may arise in connection with a particular legal relationship. The choice of the court can be one where neither of the parties are domiciled in. When an agreement is reached in this sense, the court agreed upon would have jurisdiction if a dispute between the parties arises. The article further provides that the agreed clause conferring jurisdiction must either be in writing, or in a form which is in line with practices that the parties have established between themselves. In the event of international trade or commerce, it may be in a form which accords with a usage of such FEBRUARY/MARCH 2020