Gazprom, arbitral Antisuit Injunctions and the Judgments Regulation: Wathelet AG gets one or two things off his chest

Wathelet AG opined yesterday in Gazprom, Case C-536/13, re the fate of arbitral anti-suit injunctions. (See my posting on the application, for context). He takes the opportunity to add to the chorus of criticism of the ECJ’s West Tankers ruling, at considerable length; and to review the ‘new’ regime under the Brussels I recast, in light of recital 12 of that Regulation.

His review of the ‘new’ regime of the Brussels I recast, and the contrasting positions of the EC and a number of Member States, support my proposition that the recast, by incorporating a summary of previous case-law in its recitals, has certainly not clarified things beyond discussion. Wathelet in fact suggest that the recitals do rebuke the ECJ and return application of the Regulation to the Rich scenario – however I am not convinced that Rich itself necessarily clarifies things. (It, too, like Van Uden and like the current recital, uses a confusing variety of criteria. I have a paper forthcoming on the Brussels I recast (already in a Dutch version should readers be interested) which looks into this).

At any rate, the lengthy review of the position under the recast evidently is outside the scope of the preliminary review, since the recast does not apply to it, and the ECJ is certain not to entertain the AG’s review of the recast and his rebuke of West Tankers at all. (Although his critical views are not likely to endear him to the Court).

Returning to the actual questions, the AG suggests the Court reply that that the Brussels I Regulation is not applicable in the present case (it falling exclusively within the scope of the 1958 New York Convention) and that, in any event, (what is effectively) an anti-suit injunction issued by an arbitration tribunal is not contrary to that Regulation. Finally, that under the New York Convention, a Member State cannot classify Brussels I’s jurisdictional regime as being ‘ordre public’ and hence capable of leading to refusal of recognition of an arbitral award.

The AG decisively supports arbitration in this opinion, however the ECJ is bound to be much shorter (and perhaps less sympathetic) in its judgment. To be continued….

Geert.

Doe v Nestle and Tiffany v China Merchants Bank et al: The concertina effect of the Alien Torts Statute

Update 29 October 2020 Amicus curiae briefs are now coming thick and fast.  See e.g. this one of international lawyers and scholars, advocating for a broad interpretation of the ATS. Update 27 May 2020 thank you Russell Hopkins for flagging the US Government amicus curiae brief on this (and the Cargill) case.

Update 8 July 2019 for the latest in the Doe v Nestle case see the Court of Appeals for the Ninth circuit here. The majority held that held that plaintiffs allege concrete and redressable injury that was fairly traceable to the challenged conduct of one defendant, and their allegations against another defendant were sufficient to allow a final opportunity to replead. This gives them enough standing for the case to continue on the merits.

I may yet have to insert a special category ‘ATS’ in the ‘Categories’ on the right hand side of this blog. Distinguishing, and precedent application alike keep on stretching cq enforcing the USCC’s decision in Kiobel.

On the precedent side of the debate,  Tiffany v China Merchants Bank et al , the US Second Circuit Court of Appeals took the application of Kiobel in Daimler as cue for a refusal of the recognition of Asset Restraints and Discovery Orders against a Bank with merely branch offices in New York. The Bank’s sites of incorporation and principal places of business are all outside of the US. With reference to Daimler, the Court held that there is no basis on which to conclude that the Bank’s contacts in New York are so ‘continuous and systematic’ judged against their national and global activities, that they are ‘essentially at home’ in the State.

The Ninth Circuit Court of Appeals in Doe v Nestle reversed the lower court’s decision to dismiss ATS claims and arguably indeed adopted an extensive view of ‘aiding and abetting’ within the context of ATS: ‘Driven by the goal to reduce costs in any way possible, the defendants allegedly supported the use of child slavery, the cheapest form of labor available. These allegations explain how the use of child slavery benefitted the defendants and furthered their operational goals in the Ivory Coast, and therefore, the allegations support the inference that the defendants acted with the purpose to facilitate child slavery.’ : these allegations were considered to even meet the supposedly stricter ‘purpose’ test. Defendant’s market power and control over operations abroad seemed to have played an important role.

Applicants have now been allowed to re-plead given the intervening judgments by the USSC (the Doe v Nestle case has been running for a while)- watch this space, yet again.

Geert.

‘Apartheid’ dismissed and Al-Shimari distinguished: The bar is high for the ATS’ touch and concern test

For readers unfamiliar with earlier posts on the Alien Torts Statute and its role in the corporate social responsibility debate, the title of this piece may sound like gobbledygook. Review of the interim ruling in Apartheid probably helps. As I noted in that piece, Scheindlin USDJ instructed counsel to brief on the ‘touch and concern’ test put forward by the Supreme Court in Kiobel, with the warning that they must show in particular that the companies concerned acted ‘not only with the knowledge but with the purpose to aid and abet the South African regime’s tortious conduct as alleged in these complaints’.

Having now reviewed those extra briefs, she has decided that the high bar set by the USCC in Kiobel was not met in current case. She distinguished (at p.18) the case from Al-Shimari, for the alleged violation of international law was inflicted by the South African subsidiaries of the US defendant corporations, over whom defendants may have exercised control however control alone, it transpires, is not enough to create sufficient link with the US to meet the Kiobel test.

Applicants had previously already argued that critical policy level decisions were made in the US, and that the provision of expertise, management, technology and equipment essential to the alleged abuses came from the US. This has now, so it would seem, been further backed up by detailed facts however even these facts did not graduate so to speak the US companies’ involvement from management and effective control to ‘aiding and abetting’ as Scheindlin USDJ had instructed counsel to show.

Similarish issues are at stake in trying to subject activities taking place outside the EU, to EU law by virtue of companies’ EU headquarters.

Geert.

Court of Appeal suggests in Dal Al Arkan that Choudhary reading of Article 22(5) Brussels I was per incuriam. (Exclusive jurisidiction for enforcement).

Postscript 24 November 2017 Dal Al Arkan was confirmed in Deutsche Bank AG v Sebastian Holdings Inc & Alexander Vik [2017] EWHC 459 and in Dennis v TAG Group [2017] EWHC 919 (Ch).  Permission for service out of jurisdiction is not required since the (now) Article 24(5) rule applies regardless of domicile of the parties.

In Dar Al Arkan, the Court of Appeal has suggested that the Court’s reading of Article 22(5) of the Brussels I-Regulation in Choudhary was  per incuriam (meaning, in short, without reference to relevant statutory law and case-law and hence not subject to the rule of precedent).

Article 22(5 provides for ‘exclusive jurisdiction’ ‘regardless of domicile’, ‘in proceedings concerned with the enforcement of judgments’, established for the ‘courts of the Member State in which the judgment has been or is to be enforced’.  The key word for this exclusive jurisdictional ground is ‘enforcement’. ‘Proceedings concerned with the enforcement of judgments’ means ‘those proceedings which can arise from recourse to force, constraint or distraint on movable or immovable property in order to ensure the effective implementation of judgments and authentic instruments‘ (Raport Jenard).

Difficulties arising out of such proceedings come within the exclusive jurisdiction of the courts for the place of enforcement, as was already the case in a number of bilateral Treaties concluded between a number of the original States, and also in the internal private international law of those States.

The Jenard report does not quote a specific reason for the reasoning behind this exclusivity, however one assumes that such proceedings are so intimately linked to the use of judicial authority and indeed force, that any complications in their enforcement ought to be looked at exclusively by the courts of the very State whose judicial authorities are asked to carry out the enforcement. In the words of the Court of Justice: ‘the essential purpose of the exclusive jurisdiction of the courts of the place in which the judgment has been or is to be enforced is that it is only for the courts of the Member State on whose territory enforcement is sought to apply the rules concerning the action on that territory of the authorities responsible for enforcement.’ [Case C-261/90 Reichert v Dresdner Bank, [1992] ECR 2149, para 26.).

Neither Convention, Regulation or Report Jenard clarify specifically for Article 22(5) whether the Article applies against non-EU domiciled defendants. In Choudhary, the Court of Appeal had held that it does not. However it had refrained from citing any relevant statutory or (ECJ) case-law authority. In Dar Al Arkan, the Court suggests that this renders judgment in Choudhary per incuriam in line of ECJ and scholarly authority. This is the right approach: the raison d’etre for Article 22(5) is a specific and narrowly construed one, as it is for all other parts of Article 22, in particular per the extract from Reichert, above. (A convincing case for Gleichlauf between court and applicable law).

For instance, the Article 22(5) ground for jurisdiction must not thwart jurisdiction of other courts who would have jurisdiction had the case not been brought as part of an enforcement difficulty. Therore, by way of example, the court which has jurisdiction on the basis of Article 22(5), cannot hear the defence against enforcement which is based on a request for compensation with a different mutual debt (Case 220/84, AS-Autoteile Service). Neither does Article 22(5) trump the enforcement Title of the Regulation.

Within those narrow confines, there is no reason not to extend the jurisdictional rule to defendants domiciled outside of the EU. Their non-dom status is immaterial to the proceedings. (Note that the issue on the ‘reflexive’ nature of 22(5) is not resolved by this judgment. Neither by the Brussels I recast, which does clarify (recital 14) that indeed non-EU domicile of the defendants is not relevant for the application of Article 24 of the new Brussels I-Regulation).

Geert.

 

A death prolonged or hope renewed? The ‘Apartheid’ twist to Kiobel and the ATS.

Update 19 June 2017. SCOTUS held today in BMS and rejected jurisdiction.

Update 8 May 2017. Transcipt of pleadings issued in BMS and background here.

Update 12 January 2017 Bristol-Myers, if certiorari will be granted, will further define the limits to the Daimler case-law. Notice how Bristol-Myers, in their certiorari submission, emphasise predictability for the defendant: a sentiment often found in EU private international law. Update 19 January 2017. Certiorari granted.

Update 6 January 2017 a new case has just been launched in New York, against Germany, re its colonial past in Namibia, which one imagines will test both sovereign immunity and ATS. Update 29 06 2021 that case has now reached end of the road as the USSC denied certiorari, leaving the Court of Appeal’s dismissal on the basis of foreign sovereign immunity.

(Update 3 September 2014: case dismissed end of August). Previous Update 25 July 2014: Docket still shows active case but no further development).

(Update on linked development: in April 2015, SCOTUS denied certiorari in Chiquita, in whuich the CA had applied Kiobel restrictively).

In Kiobel, the USSC /SCOTUS held on the basis of extraterritoriality: under what circumstances may US courts recognize a cause of action under the Alien Torts Statute, for violations of the law of nations, occurring within the territory of a sovereign other than the United States? In focusing on this question (and replying in the negative), the SC did not entertain the question which actually led to certiorari, namely whether the law of nations recognises corporate liability.

Soon after the same USSC held in Daimler that general jurisdiction other than in the State of incorporation applies only (in the case of foreign companies) when a foreign company’s “continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.”

In the ‘Apartheid litigation’ [Lungisile Ntsebeza et al v Ford General motors and IBM], the Southern District of New York picked up the issue where SCOTUS had left it: can corporations be held liable under the Alien Tort Statute (“ATS”) for violations of “the law of nations”‘? Scheindlin USDJ held they can on 17 April last [Xander Meise Bay has a good overview of the successive litigation here]. She firstly held that it is federal common law that ought to decide whether this is so – not international law itself (ATS being a federal US Statute). Next she argued that the fact in particular (withheld by Jacobs J in Kiobel) that few corporations were ever held to account in a court of law for violations of public international law was not instrumental in finding against such liability.

Counsel have now been instructed to brief on the ‘touch and concern’ test put forward by the Supreme Court in Kiobel, with the warning that they must show in particular that the companies concerned acted ‘not only with the knowledge but with the purpose to aid and abet the South African regime’s tortious conduct as alleged in these complaints’.  A strict timetable for arguments has been laid down whence the wait for further development should not be too long. (Update 25 July 2014: Docket still shows active case but no further development; Update 3 September 2014: case dismissed end of August).

Geert.

EU to become party to The Hague Choice of Court Convention. Not necessarily a good idea.

Update 21 May 2018. Denmark has now also acceded. Update 2 October 2015. The Convention entered into force on 1 October. Update 5/12/2014: Approval is now final (p.16) and (update 10/12) has been published in OJUpdate 16/10/2014:

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The European Commission has adopted its proposal for a Council decision on the approval, on behalf of the EU, of the Hague Convention of 30 June 2005 on Choice of Court Agreements. The Convention, which has not yet entered into force (but will be, once the EU ratifies), contains three basic rules that give effect to choice of court agreements (from the Convention’s website):

1.The chosen court must in principle hear the case (Art.5);
2. Any court not chosen must in principle decline to hear the case (Art.6); and
3. Any judgment rendered by the chosen court must be recognised and enforced in other Contracting States, except where a ground for refusal applies (Arts 8 and 9).

The Commission does propose that the EU make a declaration, excluding the application of the Convention to insurance contracts (unlike the recast Brussels I Regulation’s provisions re consumers and employees, insurers not domiciled in the EU continue to fall outside the Regulation), in spite of objections.

The downside of the complete exclusion of insurance contracts, from the point of view of European insurers, is that choice of court clauses they have negotiated with non-European policyholders would not be recognised and enforced in third States which are Contracting Parties to the Convention. From the perspective of the European policyholders, these would lose the advantage of having the decisions of EU courtsʼ (chosen by the parties) recognised and enforced outside the Union under the Convention – the EC is however more concerned about the position of the European insureds (as opposed to the insurers): if the Convention were to be concluded without excluding insurance contracts, there would be a lack of parallelism with the protective policy established in the Brussels I Regulation which allows the insured party to sue an EU insurer (or a EU branch of third State insurer) in his own place of domicile irrespective of any other jurisdiction available under a choice of court agreement. not all Member States agree with the Commission hence one will have to wait and see how this issue will be decided.

At any rate and more generally, were the EU to accede, this does of course put into question the relationship between the Brussels I Regulation, the Convention, and the Lugano Convention. The EC notes that Brussels I does not “govern the enforcement in the Union of choice of court agreements in favor of third State courts”. (Ignoring, incidentally, the judgment in Gothaer, which does achieve the same result in specific circumstances).

This would, in the EC’s view, rather be achieved by the Convention. The amendments to the Brussels I regulation introduced with the recast of 2012 “have strengthened party autonomy” and now “ensure that the approach to choice of court agreements for intra-EU situations is consistent with the one that would apply to extra-EU situations under the Convention, once approved by the Union”.

A ‘disconnection clause’ set out in Article 26(6) provides that the Convention shall not affect the application of the regulation “where none of the parties is resident in a Contracting State that is not a Member State” of the Union and “as concerns the recognition or enforcement of judgments as between Member States”.  “(T)he Convention affects the application of the Brussels I regulation if at least one of the parties is resident in a Contracting State to the Convention”, and shall “prevail over the jurisdiction rules of the regulation except if both parties are EU residents or come from third states, not Contracting Parties to the Convention”.

As regards the recognition and enforcement of judgments, the Regulation “will prevail where the court that  made the judgment and the court in which recognition and enforcement is sought are both located in the Union”.

Hence in summary, according to the proposal, the Convention will “reduce the scope of application of the Brussels I regulation”, but “this reduction of scope is acceptable in the light of the increase in the respect for party autonomy at international level and increased legal certainty for EU companies engaged in trade with third State parties”.

Hum. I am not convinced. The above signals a fairly complex regime of scope of application of Convention cq Regulation. The Regulation continues to differ from the Convention. (E.g. in not requiring written agreement for choice of court). Neither does it clearly (in contrast with the recast Regulation) settle applicable law to determine validity of the clause: is it lex fori prorogati?). In my view it adds a layer of complexity rather than removing some.

Geert.

USSC rejects US jurisdiction in Daimler v Bauman. General jurisdiction not easily eastablished lest in a company’s true home.

Update For a September 2017 application see the Illinois Supreme Court in Aspen Insurance v Interstate Warehousing.

The United States Supreme Court on 14 January rejected US jurisdiction in Daimler v Bauman.  See previous posting on this case here and ultra-short reference here. Chief Justice Roberts’ and concurring opinions in Kiobel leave room for further distinguishing.  Daimler does less so. The Court in the end did not focus too much on the issue of agency and attributability of a subsidiary’s actions to the mother company (Daimler is a German corporation that was sued in California by Argentinian plaintiffs for human rights violations in Argentina. The Californian link was a subsidiary which distributes cars there but which is not incorporated there: its corporate home is Delaware).

As William Baud points out, the USSC (as indeed do highest courts of the land elsewhere) does not necessarily decide on the points which counsel would like it to decide. Instead, the USSC generally upholds a restrictive view of general jurisdiction. Per International Shoe [see also Dwight Healy and Owen Pell], general jurisdiction other than in the State of incorporation applies only (in the case of foreign companies) when a foreign company’s “continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.”

If you want to sue a company on the basis of its having its ‘home’ in the forum, then that home better be exactly that. Not, as here, merely a condo in the US when its true home lies in Germany.

Generally,  the USSC held that a state court may exercise general jurisdiction over out-of-state corporations when their “affiliations with the State are so ‘continuous and systematic’ as to render them essentially at home in the forum State.”

(Writing for the majority) Judge Ginsburg (p.23) noted the difference between the Court of Appeal’s approach and the EU approach when it comes to overall personal jurisdiction over corporations (she referred to the recast Brussels I Regulation, 1215/2012, which is yet to apply but which in substance on this issue does not differ from the previous version). However in reality there is quite a different direction (compared to Daimler) which the EU takes vis-a-vis foreign corporations, in the particular context of B2B consumer contracts as well as employment contracts (an entirely different subject-matter, I appreciate).

Geert.

Where are all the dead pigeons? Proposed amendment to the Brussels I-Regulation prepares the ground for the Unified Patent Court

Pre-script posted 6 June: the amending Regulation was adopted in April (and published as Regulation 542/2014). The assets rule which it includes prima facie only applies for damage taking place outside the EU resulting from non-doms’ infringement. How and whether the assets rule applies vis-a-vis damage inside the EU caused by non-doms is still not clear. You may want to read the ‘comments’ section under this posting for clarification.

 

The proposal to amend Regulation 1215/2012 is due to be adopted by the European Parliament before its election recess. It forms part of the rather complex set of arrangements to introduce the Unified Patents Court – an oxymoron indeed. Leaving aside the complex set of arrangements at the substantive law level, I just wanted to highlight one or two interesting charachteristics at the pure conflicts /jurisdiction level.

The proposed amendment has a twofold objective. Firstly, to ensure compliance between the UPC Agreement and the recast Brussels I Regulation. So far so uncontested. These revisions concern in particular the clear inclusion of the UPC (as well as the Benelux Court) within the Regulation’s definition of a ‘court’; and the revision of the (rather complex)  regime of Article 71 with respect to international agreements and their relationship with the Brussels I Regulation.

The second objective however is misleadingly represented as necessarily forming part of the UPC package: the issue of jurisdiction vis-a-vis defendants not domiciled in the EU (see inter alia here for earlier postings on non-EU domiciled defendants). The newly inserted Article 71b essentially and as a rule lets the ‘common courts’ (i.e. the UPC and the Benelux Court) usurp national jurisdiction (for those States that have subscribed to the common court – remember this is an instrument of enhanced co-operation):

1. The common court shall have jurisdiction where, under this Regulation, the courts of a Member State party to an agreement establishing a common court have jurisdiction in a matter governed by that agreement.

It then prima facie at least suggests that all jurisdictional rules of the Regulation apply regardless of third State domicile:

2. Where the defendant is not domiciled in a Member State, and this Regulation does not otherwise confer jurisdiction over him, the provisions of Chapter II shall apply as if the defendant was domiciled in a Member State. Article 35 shall apply even if the courts of non-Member States have jurisdiction as to the substance of the matter.

Chapter II includes all jurisdictional rules: including the basic rule of domicile of the defendant (the new Article 4, previously Article 2).

This prima facie conclusion is supported by the (proposed) newly inserted sentence in recital 14:

“Uniform jurisdiction rules should also apply regardless of the defendant’s domicile in cases where courts common to several Member States exercise jurisdiction in matters coming within the scope of application of this Regulation”

The newly proposed Article 71b (3) however then would seem to contradict this by stating

3. Where the defendant is not domiciled in a Member State and no court of a Member State has jurisdiction under this Regulation, the defendant may be sued in the common court if:
a) property belonging to the defendant is located in a Member State party to the agreement establishing the common court;
b) the value of the property is not insignificant compared to the value of the claim;
c) the dispute has a sufficient connection with any Member State party to the agreement establishing the common court.

Now I am getting very confused: if, per Article 71b (2), jurisdiction shall be determined ‘as if the defendant was domiciled in a Member State’, how then can there still be a calling for Article 71b (3)? Is it because the proposal aims to introduce a reflexive application (meaning one which also works where the exclusive jurisdictional ground points away from the EU) of Article 22(4) [Article 24(4) in the new Regulation] – i.e. the exclusive jurisdictional ground for registration or validity of intellectual property rights?

Interestingly, Article 71b(3) (proposed) reinstates, for the common courts and whence for patent disputes only, the ‘assets’ rule vis-a-vis third State defendants which the European Commission had failed to introduce as a general rule in the recast Regulation (these are the dead pigeons of the title of current posting).

It is also noteworthy that the proposal acknowledges that courts in third States may have jurisdiction, and that in that case EU (common) courts may still issue provisional measures.

No doubt there may be some kind of explanation for my confusion. I should be glad to hear it.

Geert.

Unilateral jurisdiction clauses valid under English law – The High Court in Mauritius Commercial Bank Limited v Hestia Holdings Limited

The High Court (England and Wales) has upheld a so-called ‘unilateral’ or ‘one-sided’ jurisdiction clause (choice of court agreement) on 17 May last. The finding is in contrast with the French Cour de Cassation’s stance  in Banque Privee Edmond de Rothschild Europe v X – which had some calling in the case by virtue of defendants arguing that the jurisdiction agreement ought to be subject to Mauritian law, which is anchored on French civil law. In that case, the Cour de Cassation held that the unilateral clause was invalid under (doubtful) reference to Article 23 of the Brussels I Regulation – the clause was held not to be binding under the French doctrine of clauses potestatives, even though the agreed forum was Luxembourg (whence the validity of the clause was judged under the lex fori derogati, not prorogati; that will no longer be possible under the recast Jurisdiction Regulation).

It is noteworthy that claimant was based in Mauritius; first defendant a Mauritius-registered company; and second defendant the first defendant’s parent company and registered in India. Under the current Brussels I Regulation (this however will change once the new regime applies as of 2015), for the choice of court clause to be covered by the Brussels Regime, at least one of the parties has to be domiciled in the EU.

The contract at issue, read:

‘Clause 23 – Governing Law. This Agreement and any dispute or claim arising out of, or in connection with, it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with English Law.

Clause 24 – Enforcement.

24.1 Jurisdiction

(a) The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement) (a “Dispute”).

(b) The Parties agree that the courts of England are the most appropriate and the most convenient courts to settle Disputes and accordingly no Party will agree [sic, obviously a typographical error for argue] to the contrary.

(c) This Clause 24.1 is for the benefit of the Lender only. As a result the Lender shall not be prevented from taking proceedings related to a Dispute in any other courts in any jurisdiction. To the extent allowed by law the Lender may take concurrent proceedings in any number of jurisdictions.

24.2 Service of Process

(a) The Borrower and the Guarantor shall irrevocably appoint ‘Progress Corporate Services Private Limited’ presently located at 2, Lansdowne Road, Croydon, Surrey, London CR9 2ER.’

The Defendants argued that clause 24.1 is invalid under its proper law, whether that of Mauritius or England, and that in the absence of a valid English jurisdiction agreement, the court does not have jurisdiction over Hestia and Sujana. The Defendants’ challenge to the validity of clause 24.1 rested on two alternative grounds. They allege that the jurisdiction agreement contained in clause 24.1 remained subject to Mauritian law, notwithstanding clause 23; and that under Mauritian law the jurisdiction agreement is ineffective, as a result of the decision of the French Cour de cassation in Rothschild Europe v X, because it is one sided: it allows MCB to sue, or insist on being sued, in any jurisdiction in the world, but binds Hestia and Sujana to litigate in England if MCB so choose. Alternatively, it is submitted that if clause 24.1 is governed by English law, it is too one sided to be compatible with fundamental principles regarding equal access to justice and should not be upheld under English law.

The High Court rejected Mauritian law as the applicable law to the clause (although it did entertain the validity under Mauritian law obiter and was not convinced that Rotschild Europe would be applied by Mauritian courts) and saw no problem whatsoever for the validity of the clause under English law. Popplewell J referred to scholarship:

‘As Professor Fentiman has observed in a recent article in the Cambridge Law Journal entitled “Universal jurisdiction agreements in Europe” (CLJ (2013) 72 (1) 24-27) :

“Such unilaterally non-exclusive clauses are ubiquitous in the financial markets. They ensure that creditors can always litigate in a debtor’s home court, or where its assets are located. They also contribute to the readiness of banks to provide finance, and reduce the cost of such finance to debtors, by minimising the risk that a debtor’s obligations will be unenforceable. Such agreements are valid in English law . . . Indeed despite their asymmetric, optional character it is difficult to conceive how their validity could be impugned or what policy might justify doing so . . .” ‘

Arguments based on the ECHR were rejected:

‘If, improbably, the true intention of the parties expressed in the clause is that MCB should be entitled to insist on suing or being sued anywhere in the world, that is the contractual bargain to which the court should give effect. The public policy to which that was said to be inimical was “equal access to justice” as reflected in Article 6 of the ECHR. But Article 6 is directed to access to justice within the forum chosen by the parties, not to choice of forum. No forum was identified in which the Defendants’ access to justice would be unequal to that of MCB merely because MCB had the option of choosing the forum.’

Note Popplewell J’s reference to ‘improbably’: for any chosen forum would have to uphold jurisdiction on the basis of its own conflict of laws rules.

The material validity of unilateral choice of court agreements is not addressed by the recast Brussels I Regulation (in other words there is no EU rule determining their validity; the Cour de Cassation’s view on this is disputed) – and choice of court agreements continue to be exempt from the Rome I Regulation. The decision in Mauritius Commercial Bank certainly indicates a very favourable approach by the English courts. With the recast Regulation providing for lex fori prorogati as the law destined to rule on the validity of the choice of court agreement, this leads to clear instruction to counsel.

Geert.

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