“In the event of a dispute arising between the parties regarding [DEFINE DISPUTE], the parties hereby agree that the dispute shall be subject to the exclusive jurisdiction of the courts [INSERT JURISDICTION].” Jurisdiction clauses may specify jurisdiction in countries associated with one or more parties involved. In addition, liability can be declared in a neutral place. There are three main reasons for determining which specific court has jurisdiction in the event of a dispute: jurisdiction clauses must always be explicitly included in the contract.7 It is important that a contract clearly states the parties` agreement on a particular jurisdiction. Do not leave this to invoices sent after the conclusion of the contract, nor fall into the trap of exchanging the general conditions of the parties, thus guaranteeing a “battle of forms” argument over the conditions – and the exclusive jurisdiction clause – that apply. Each party to this Agreement irrevocably agrees that the courts of England shall have exclusive jurisdiction to hear, resolve and/or resolve any dispute, controversy or claim (including any dispute, controversy or non-contractual claim) arising out of or in connection with this Agreement, including any matter relating to its existence, validity, formation or termination. To this end, each party irrevocably submits to the jurisdiction of the English courts. Simply put, exclusive jurisdiction means that only the courts referred to in the jurisdiction clause have the power to rule on a dispute. Non-exclusive jurisdiction, on the other hand, means that courts other than those expressly mentioned in the jurisdiction clause may also have the power to settle a dispute. This guide highlights the main considerations to be taken into account when drawing up a jurisdiction clause. The use of an exclusive or non-exclusive jurisdiction clause depends on the facts of the case. For example, in a share purchase agreement, a seller will likely prefer an exclusive jurisdiction clause because the seller is the party most likely to be sued and may want to be certain that it will be.
The risk of being sued in foreign courts of uncertain jurisdiction is not attractive. On the other hand, in a share purchase agreement, the buyer may want a non-exclusive jurisdiction clause so that he can be sure that he can bring an action in the English courts (or the courts of the chosen jurisdiction) as well as in the courts of another jurisdiction where the seller has or could have. Active. A jurisdiction clause therefore stipulates that the parties have agreed that the courts of a particular country will assume jurisdiction over all disputes that may arise (in other words, have the right to be heard). “Any dispute arising out of or relating to this Agreement, including any matter relating to its existence, validity or termination, shall be submitted and finally resolved by arbitration in accordance with the DIFC-LCIA Arbitration Center ARBITRATION Rules, the rules of which shall apply by reference to this clause. A well-formulated dispute settlement clause is essential and provides certainty in terms of procedures and procedures for parties wishing to resolve a dispute. This is even more common in an international environment where the parties are based in different jurisdictions. Below, we outline the key issues to consider when drafting jurisdiction clauses and arbitration agreements, and provide some perfect examples of the most established courts and arbitration institutions in the world. When drafting a jurisdiction clause, there are three options: A clause on the applicable law does so by expressly determining the choice of applicable law by the parties.
In English law, nothing prevents you from inserting a clause that grants exclusive jurisdiction to two states at the same time, and this may be preferred if the parties reside in different jurisdictions and no agreement can be reached on the preferred national court. One way to do this would be to explain that if Party A pursues Part B, Court A has jurisdiction, and If Party B pursues Part A, Court B has jurisdiction. When doing this, it is important to ensure clarity of drafting so that the intent is clear. A jurisdiction clause may provide for jurisdiction in a country associated with one or more of the parties, or it may provide for jurisdiction in a neutral forum. There are three main reasons for indicating which court has jurisdiction: A relevant clause expressly states the choice of law applicable to the contract, so that no prior argument is required as to which country should use the law of the country when interpreting the contract. These types of clauses are called “boilerplate” clauses and are standard in almost all contracts and are usually set towards the end of the agreement. In the absence of a jurisdiction clause, the decision as to which court is empowered to rule on a dispute is governed by the rules of private international law. This tends to cause inconvenience and uncertainty and can potentially lead to higher costs and possible delays in the next procedure. International treaties sometimes contain an arbitration clause. Arbitration is a form of alternative dispute resolution (ADR) that can help resolve a commercial dispute without litigation, thus avoiding going to court and dealing with the resulting jurisdictional or legal issues as a whole. However, these agreements are not considered exclusive under the Hague Convention on Jurisdiction Agreements.
As this may be the mechanism by which the UK maintains mutual applicability within the EU, it may not be desirable to designate two courts as having exclusive jurisdiction over EU-related transactions. Also keep in mind that there is a risk of parallel proceedings, especially if there is a counterclaim to a claim, with the claim being heard by one court and the counterclaim by another court. If there is no clause conferring effective jurisdiction, the appropriate place of jurisdiction for the resolution of a dispute will be decided by reference to the rules of private international law. This can lead to uncertainty and inconvenience and lead to additional costs and delays in processing a procedure. Member States have exclusive jurisdiction over certain types of disputes, irrespective of their place of residence (e.B. claims relating to immovable property, certain company law issues, etc.). Where Member States have such exclusive jurisdiction, it shall prevail over everything that the parties have agreed in a contractual jurisdiction clause and the designated court shall decline jurisdiction if claims are brought against them. 44.3. Applicable law and jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the Republic of China, without regard to its principles of conflict of laws rules. Any dispute, question or difference of any kind arising at any time at a later date between the parties (including the Company) or their respective representatives or any of them that the parties cannot resolve amicably between them, with respect to or in connection with this Agreement or the validity, the interpretation, meaning, function or effect thereof, or any clause contained therein; or with respect to the rights, obligations or liabilities of the Parties under this Agreement or under this Agreement, shall be definitively governed in accordance with the Arbitration Rules of the International Chamber of Commerce by one (1) arbitrator appointed in accordance with such Rules.
The arbitration proceedings will take place in Israel and will be conducted in English. The decision on an arbitral award rendered by the arbitrator may be registered with any court of competent jurisdiction, or an application may be made to that court for judicial acceptance of the award and, where appropriate, for an enforcement order. The choice of non-exclusive jurisdiction provides, in principle, that disputes are to be heard before the courts of a particular jurisdiction, without prejudice to the right of either party to bring a dispute before the courts of another jurisdiction, where appropriate. Such clauses provide certainty to the extent that you know that disputes can be heard in a particular jurisdiction that you find attractive, but if jurisdiction is required elsewhere, it is available. Although they offer greater flexibility, there is a risk of parallel proceedings.3 A typical provision of applicable law is as follows: “This Agreement shall be governed by and construed in accordance with the laws of [Thailand/England/Singapore/etc.].” Whatever you choose, make sure that the jurisdiction clause clearly reflects your choice. For example, if you submit your disputes to the exclusive jurisdiction of the English courts, use the word “exclusive”.11 Caution should also be exercised when drafting a non-exclusive jurisdiction clause, as it can be formulated in several ways. For example, if you opt for a non-exclusive clause and want to be able to conduct simultaneous proceedings in a number of jurisdictions, make sure that the wording reflects this (see the hybrid clause template below). If you wish to be able to bring an action in another anonymous jurisdiction, even after the other party has brought an action in that jurisdiction, this must also be indicated in the drafting.
Ideally, it is advisable to seek the opinion of a professional on the form and content of the applicable law and the jurisdiction clauses for a particular contract. However, if this is not practical, the principles described above can help avoid some of the problems that may arise. Do you want every dispute imaginable to be decided by a specific court? If so, the clause should be broad in order to avoid disputes as to whether a particular dispute falls within the scope of the clause […].