Lloyd's Maritime and Commercial Law Quarterly

Professor Francis D Rose

Document

THE “PARTY SCOPE” OF EXCLUSIVE JURISDICTION CLAUSES

Adeline Chong*

1. Global Partners Fund v. Babcock & Brown

Coherency in international litigation and upholding exclusive jurisdiction clauses, for the most part,1 work hand in hand. Courts generally take jurisdiction on very wide and exorbitant grounds.2 There is therefore the ever-present risk of irreconcilable judgments stemming from multiple courts hearing disputes arising from the same transaction or state of affairs. One way in which such a risk is averted is by giving effect to exclusive jurisdiction clauses where parties have included such clauses into their contracts.3 Thus, when faced with an action brought in breach of an exclusive jurisdiction clause in favour of another forum, the starting position is that the court will stay its proceedings unless the plaintiff is able to show “strong cause” or “strong reasons” why he should be allowed to breach his promise to sue exclusively in another forum.4 Another means by which the courts strive to uphold exclusive jurisdiction clauses is by taking a liberal construction of them.

There are two aspects to taking a liberal construction of an exclusive jurisdiction clause: first, in terms of the “subject matter scope” and, secondly, in terms of the “party scope” of the clause.5 On the first, the foremost decision is Fiona Trust v. Privalov,6 where the House of Lords made it clear that semantics had no role to play and, in the absence of

* Assistant Professor of Law, Singapore Management University. I would like to thank Professor TM Yeo, the anonymous referee and participants at the 2011 ILA Asia-Pacific Regional Conference, Taipei, Taiwan (where a version of this paper was presented) for useful comments, and Professor Adrian Briggs for bringing this case to my attention. All errors remain my own.

1. Cf Donohue v. Armco Inc [2001] UKHL 64; [2002] 1 Lloyd’s Rep 425.

2. Global Partners Fund Ltd v. Babcock & Brown Ltd (in liq) [2010] NSWCA 196; 79 ACSR 383, [68].

3. See the Hague Convention on Choice of Court Agreements 2005.

4. The Eleftheria [1969] 1 Lloyd’s Rep 237; The El Amria [1981] 2 Lloyd’s Rep 119.

5. The phrases “subject matter scope” and “party scope” are derived from the judgment in Global Partners v. Babcock & Brown [2010] NSWCA 196.