In favor of a clear exclusive jurisdiction clause

Categories: Business Law
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Tags: Jurisdiction

On 23rd April 2015, the Court of Appeal of England and Wales delivered its decision in the case between Chinese company Hin-Pro International Logistics Limited and Chilean company Compania Sud Americana De Vapores S.A. ([2015] EWCA Civ 401).

The key issue was whether a clause in bills of lading providing for English jurisdiction was an exclusive jurisdiction clause. The clause read: “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. In the case of Chile, arbitrators shall not be competent to deal with any such dispute and proceedings shall be referred to the Chilean Ordinary Courts”. According to the decision, it is common ground that, as a matter of Chilean law, the third sentence is void.

The Chinese Cie started proceedings in China. The Chilean Cie obtained anti-suit injunctions from an English court, which later held Hin-Pro and its sole director Miss Su Wei to be in contempt. Hin-Pro’s contempt lay in participating in a mediation and jurisdiction hearing in China. Miss Wei’s contempt consisted of causing or permitting Hin-Pro to do so. Miss Wei was committed to prison for 3 months but never apprehended. Hin-Pro then commenced a further 23 actions in China against CSAV in different courts. CSAV challenged the jurisdiction of the courts in China but its challenges were dismissed. CSAV lost the case in a Chinese court and paid. However, further proceedings took place in England, to the benefit of CSAV. The case reached the Court of Appeal.

What is interesting, and maybe a lesson to be considered in relation to both the weight of the UK in the world in the light of the forthcoming referendum on the membership of the EU and the judgments projects currently negotiated at The Hague Conference on Private International Law, is that the Chinese company deliberately refrained from participating in the English proceedings for a long time because it felt that it was in its interests to do so. According to one of the English judges involved in the case, the only thing that had brought Hin-Pro before the court had been the receivership order in Hong Kong, which probably owes much to the historical link between the UK and that specific part of China which is Hong Kong.

The Court of Appeal concluded that the jurisdiction clause was indeed exclusive, among others because “the words “shall be subject to” are imperative and directory” (paragraph 61). The decision will probably be easier to reach in the future, that is with the Brussels I bis Regulation (which entered into force in January 2015 for proceeding instituted after). Indeed, article 25 Brussels I bis states: “If the parties, regardless of their domicile, have agreed that a court or the courts of a Member State are to have jurisdiction […] Such jurisdiction shall be exclusive unless the parties have agreed otherwise” (for a complete analysis, see S. Francq, “Les clauses d’élection de for dans le nouveau règlement Bruxelles I bis”, in “Le nouveau règlement Bruxelles I bis », Bruylant, June 2014, p. 107).

(Altalex, 13 July 2015. Article by Emmanuel Guinchard)

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