Asymmetric Jurisdiction Clauses And Enforcement Of English Judgements Following Brexit ' Creditors And Other Parties To Reconsider?

• Published date: 27 January 2021
• Subject Matter: Government, Public Sector, Litigation, Mediation & Arbitration, Constitutional & Administrative Law, Trials & Appeals & Compensation
• Law Firm: Advokatfirman Cederquist
• Author: Ms Elsa Arbrandt, Johan Lundberg and Ingrid Ek

Parties usually include a jurisdiction clause in their agreement to decide on which national court(s) shall have the authority to determine a dispute. In credit agreements asymmetric clauses are often used. Asymmetric jurisdiction clauses are characterized by giving the parties non-symmetric options regarding jurisdiction. In a credit agreement the creditor is typically given the right to initiate proceedings in any court of any competent jurisdiction, while the borrower may only initiate court proceedings in the one jurisdiction specified in the relevant jurisdiction clause. This ensures that the creditor can initiate proceedings against the borrower where it is incorporated, but also in any other jurisdiction where it conducts business or where any of its assets are located.¹ Further, the asymmetric clause seeks to reassure the creditor that it may only become the subject of court proceedings in its preferred jurisdiction.²

The question is what effect an asymmetric clause will have after Brexit? This has not yet been tried by the Swedish courts.

Based on caselaw from the European Court of Justice (ECJ), English courts have stated that asymmetric jurisdiction clauses are valid under the Brussels Recast Regulation as an exclusive jurisdiction clause.³ However, this has only immediate relevance in relation to proceedings commenced on or before 31 December 2020 since the Brussels Recast Regulation ceased to apply in the UK in conjunction with Brexit.

Following Brexit, most parties will seek to find jurisdiction and mutual recognition of judgements under the 2005 Hauge Convention on Choice of Court Agreement (Hague Convention), assuming that the UK does not accede to the 2007 Lugano Convention. The Hague Convention is an international treaty that applies to exclusive choice of court agreements concluded in civil or commercial matters. The Hague Convention is not an instrument of EU law, but the EU is a party to the convention. As a result of Brexit, the Hague Convention will apply to proceedings between the EU and the UK. The question is therefore whether asymmetric clauses are recognized as exclusive choice of court agreements and valid under the Hague Convention?

In Article 3 (a) of the Hague Convention, an exclusive choice of court agreement is defined. The definition does not give a clear answer to the question whether an asymmetric clause shall be considered an exclusive jurisdiction clause. However, as noted in the explanatory report by Professors...