English jurisdiction clauses: should you include a forum non conveniens waiver?

It goes without saying that parties wishing to ensure their disputes are dealt with by the English courts should include English jurisdiction clauses in their contracts.

An “exclusive” English jurisdiction clause confers jurisdiction to deal with the parties’ disputes on the English courts only. A “non-exclusive” English jurisdiction clause confers jurisdiction to deal with the parties’ disputes on the English courts, but also leaves it open to the parties to bring proceedings in other courts of competent jurisdiction should they so wish.

Once an English jurisdiction clause of either type is in play, the English courts will almost always take jurisdiction over any dispute which is caught by the clause. It can, however, be forgotten that, even in the face of an applicable English jurisdiction clause, the English courts at least in some circumstances retain a residual discretion to decline to hear a dispute. That discretion is rarely exercised, but a party which is determined to prevent the English courts from dealing with a dispute may still point to it in a last-ditch attempt to achieve that goal.

A recent case, Investec Bank plc v Protopapa & Anor, represents an example of exactly that – and explores how the inclusion of a forum non conveniens waiver in an English jurisdiction clause can assist in fending off such arguments.

Investec Bank plc v Protopapa & Anor

An English bank had entered into two loan agreements with two Swiss individuals, which were governed by English law and contained asymmetric English jurisdiction clauses (conferring exclusive jurisdiction on the English courts to settle the parties’ disputes but allowing the bank to bring proceedings in other courts of competent jurisdiction should it so wish). When the borrowers defaulted on the loans, the bank brought proceedings against them in England. Despite the proceedings being caught by the English jurisdiction clauses, the borrowers asked the English court to exercise its residual discretion to stay them on the basis that the Swiss courts were the more appropriate forum for the dispute.

The English court roundly rejected the borrowers’ request. In doing so, the court considered the effect of a forum non conveniens waiver that the parties had included with their English jurisdiction clauses.

What is a forum non conveniens waiver?

A forum non conveniens waiver is wording which is sometimes added to an English jurisdiction clause to seek to bolster its effectiveness. It is usually made up of two parts: (i) an agreement by the parties that the English courts are the most appropriate courts to hear their disputes; and (ii) a promise that neither of them will argue otherwise.

Here, the parties’ forum non conveniens waiver read as follows:

“The Bank and the Borrower agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly neither of them will argue to the contrary.”

What is the effect of a forum non conveniens waiver?

The court held for the first time that the initial part of the waiver – the agreement between the parties that the English courts were the most appropriate forum for their disputes – was sufficient to found a contractual estoppel. This meant that the borrowers were contractually prevented from running arguments that the Swiss courts (or any other courts) were an appropriate forum for the dispute. Even if the English courts had a residual discretion to stay the English proceedings, notwithstanding the English jurisdiction clauses, the borrowers could not run arguments that that discretion should be exercised.

Key takeaway

Any party which is concerned to ensure that their disputes are dealt with by the English courts – such as a bank dealing with an overseas borrower – should now consider including a forum non conveniens waiver with their English jurisdiction clause. The waiver will not necessarily prevent a borrower from making last-gasp attempt at challenging the English courts’ jurisdiction, as happened here, but when it comes fending off such challenges, it will add another string to the bank’s bow beyond the (already significant) protection that an exclusive English jurisdiction clause affords.

Our experience

Burness Paull has a distinct English law dispute resolution team and is a leading firm for complex and high-value English law disputes. The partners in our team hail from some of the world’s leading law firms, including the majority of the Magic Circle firms, and have been involved in disputes in the English courts on behalf of clients from, or issues arising in, myriad jurisdictions within North and Central America, South America, Europe, Asia, the Middle East, and Africa. Our team is specifically known for expertise in: commercial and contractual disputes; M&A, partnership and shareholder disputes; banking and finance litigation; energy and oil and gas disputes; civil fraud and asset tracing; and real estate litigation.

Our team is on hand to support you with any actual or potential dispute, whether in the form of a litigation, arbitration or investigation – please get in touch with any of our team to discuss your needs.