15 October 2016

Is the jurisdiction clause strong enough to defend itself?

When a party to an international commercial contract is brought before court, it may subsequently try to involve its subcontractor in these proceedings through a third party intervention. For example: a complex installation is delivered by a Belgian company to its client (with a Belgian jurisdiction clause), and the Belgian company subcontracted work to a UK company (with an English jurisdiction clause).

At European level this issue is governed by the Brussels Ibis Regulation. Third parties can be sued to intervene before the court seized with the original proceedings, which has special jurisdiction (article 8,2).

However, international contracts can contain a jurisdiction clause making the courts of the country of a foreign contracting party competent. In such case the designated courts shall have exclusive jurisdiction (article 25).

The EU Court of Justice has answered the question what weighs the strongest by considering that the attribution of jurisdiction by consent excludes this special jurisdiction (CJEU 14 December 1976, C-24/76, Estasis Salotti, nr. 7). MVVP also just obtained a judgment of the Commercial Court of Antwerp in this sense.

Parties still try to set aside the prevalence of the jurisdiction clause by invoking the prevalence of jurisdiction for third party intervention. Such legal battles illustrate the need to establish a coherent strategy as to jurisdiction clauses when subcontracting.

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