Judgment Of 26 September 2012: 'The French Supreme Court Strikes Down One Way Jurisdiction Clause'

A client of the Luxembourg-based bank Banque Privée Edmond de Rothschild Europe introduced a claim against the bank and its affiliate, Société Compagnie Financière Edmond de Rothschild, having its registered office in Paris, in relation to significant losses in the value of its portfolio. The client claimed for damages against the bank and its affiliate before a court in Paris. The defendants argued that the French Court should deny jurisdiction based on a clause in the agreement with the client attributing exclusive jurisdiction for all claims against the bank to the courts of Luxembourg, while allowing the bank to claim against the client in any appropriate jurisdiction.

The French Cour de cassation rejected this defence against the claim from the French client based on two considerations:

(i) Firstly, the French Cour de cassation, based on the consideration that the jurisdiction clause imposed on the client to call exclusively on the Luxemburgish courts, while the bank reserved the right to act in the domicile of the client or before "any other competent court", concluded that the clause was only binding on the client and was thus of a discretionary nature in regard to the bank (caractère potestatif), which is contrary to the object and purpose of the jurisdiction clause exception of Article 23 of EC Regulation 44/2001 of 22 December 2000 ( the "Brussels 1 Regulation").

(ii) In a second argument, the court responded to the bank's criticism, based on Article 6 paragraph 1 of the Brussels 1 Regulation, that the Court of Appeal had not explained why it had agreed to hear together two cases which did not have the same object and were subject to different governing laws (Luxembourg and...