10. Jurisdiction and Conflict of Laws

Question 1

International aspects of a dispute

Answer 1

When a dispute has an international dimension – so in some way it touches on a country other than England or Wales – there are three things to consider.

1 Do the courts of England and Wales have jurisdiction to determine the claim?

2 Which country’s laws will apply to determine a dispute?

3 Will it be necessary to enforce the judgment abroad and how will this be done?

Question 2

Law and jurisdiction contrasted

Answer 2

The first question is concerned with whether the English / Welsh courts will decide a dispute – or is it a dispute that should not be resolved in some other court / tribunal. The second question is concerned with which laws the English and Welsh courts will apply to decide the dispute, assuming they do have jurisdiction.

Don’t confuse these two questions! In most cases you come across, the courts of England and Wales are applying English / Welsh law. But it may not be so. For example, for reasons you will go on to explore, an English Court might conclude that it has jurisdiction to hear a dispute, but that French law applies. The court will then determine the claim, but using French law. It will probably need expert evidence in relation to the French law.

Note that the CPR will always apply to disputes before the Courts of England and Wales, whether the applicable law is English law, French law or any other law. So a line has to be drawn between English procedural law like the CPR which always applies, and the English substantive law, which could be displaced in an international dispute with the law of another country.

Question 3

Why does it matter?

Answer 3

It is also important to know which court(s) have jurisdiction because:

1 If you commence proceedings in a court which does not have jurisdiction, the court might refuse to decide the dispute, and this can lead to time and money being wasted; and

2 It is possible that more than one court has jurisdiction to determine a dispute. You might then be able to choose whichever is preferable.

It is important to understand which country’s law applies – without knowing which law applies, you cannot carry out a useful case analysis.

Question 4

Jurisdiction: the Hague Convention

Answer 4

As a general rule, the Courts of England and Wales will determine disputes over matters occurring in England and Wales – not over matters that take place outside England and Wales or that concern nationals of other countries. If a dispute takes place outside England and Wales or involves a national from a different country, you need to consider whether there are additional criteria that must be satisfied to establish that the courts of England and Wales have jurisdiction.

The Hague Convention on Choice of Court Agreements (‘Hague Convention’) aims to provide certainty in this area for commercial parties that wish to choose a particular country’s courts to determine their disputes regardless of where the dispute takes place or where the parties are based. So it allows the parties to control which court will hear a dispute.

Note that the Hague Convention only applies to choice of court agreements concluded on or after 1 October 2015. Such a choice will be made in an agreement between the parties, for example in a contract between the parties. The parties to such an agreement may be based in any jurisdiction (ie they do not need to be based in a Contracting State of the Hague Convention in order to enter into such a choice of court agreement).

Question 5

Hague Convention Approach

Answer 5

Civil and commercial matters

Firstly, the Hague Convention only applies to civil and commercial matters: this covers a wide range of matters, meaning most of the common types of contracts between commercial entities will be included. Public law and criminal disputes are not covered (Article 1(1)).

Exclusions

Secondly, certain types of disputes are excluded from the Hague Convention. This includes disputes with consumers and employment matters. There are other exclusions and in practice you should check the Hague Convention (Article 2).

Jurisdiction to a contracting state?

Thirdly, the Hague Convention only applies where the parties have chosen a Contracting State as the court that will have jurisdiction (Article 3(a)). The Contracting States at the time of writing are the UK, all EU members states, Mexico, Singapore and Montenegro. So if there is a clause in a contract stating that the Courts of France (an EU member state) have jurisdiction, then that falls within the Convention. If the clause indicates that the courts of a particular state in the USA have jurisdiction, then the Hague Convention will not apply in that situation. That does not necessarily mean that the clause will not be effective, it means that you will need to find the answer as to whether it is effective elsewhere (such as by applying the common law rules).

Exclusive jurisdiction

Fourthly, the Hague Convention only applies to clauses which give exclusive jurisdiction to a particular country – ie that country and no other has jurisdiction (Article (1) and Article 3(a) and (b)). So…

Concluded / evidenced in writing

The Hague Convention only applies if the jurisdiction agreement is in writing, or evidenced / documented in writing (Article 3(c)).

Asymmetric agreements

An ‘asymmetric’ agreement is one that provides that one party can commence proceedings only in a specific named country, but the other party can commence proceedings in that country or any other which would have jurisdiction under any other relevant rules. So the same rights are not given to each party, hence the ‘asymmetry’.

Due to the way the Hague Convention is worded, it is unclear whether such a clause would fall within the Hague Convention or not.

Question 6

Key principles of the Hague Convention

Answer 6

1 The court indicated as having jurisdiction will have jurisdiction, and cannot decline it on the basis that the dispute should be decided in another country (Article 5(1) and (2));

2 Any other court must refuse to hear the proceedings (Article 6 – there are limited exceptions).

Question 7

The relevance of service

Answer 7

When it comes to establishing the jurisdiction of the courts of England and Wales, the question of jurisdiction is linked to service of proceedings. Broadly, the court will have jurisdiction under the common law if:

a. it is possible to serve the proceedings on the defendant in the jurisdiction (in England and Wales) – the defendant is ‘present’ in the jurisdiction; or

b. the court gives permission to serve the proceedings on the defendant outside of the jurisdiction; or

c. the Courts of England and Wales are given jurisdiction by a clause in a contract.

Question 8

Serving the proceedings on the defendant in the jurisdiction

Answer 8

A defendant will (in principle) be subject to the jurisdiction of the courts of England and Wales if proceedings are served on the defendant whilst that defendant is within the jurisdiction. This is true even if the defendant is a foreign defendant (in the sense that it is based in another jurisdiction), or if the subject matter of the proceedings is based in / took place in another jurisdiction.

For example, proceedings can be served by a variety of methods, including personal service (CPR 6.5) – actually leaving the proceedings with an individual defendant. Proceedings can be personally served on an individual defendant in England and Wales even if they live in another jurisdiction and are only very briefly in England and Wales.

Similarly, a company not incorporated in England and Wales can be served at any place of business of the company within England and Wales (CPR 6.9(2)).

In a similar vein, if a defendant appoints a solicitor in England and Wales to accept service on its behalf, and the proceedings can then be served on that solicitor within the jurisdiction.

Question 9

Permission to serve the proceedings on the defendant outside of the jurisdiction

Answer 9

If a party cannot (or for some reason does not want to) serve proceedings within the jurisdiction, it can apply to serve the proceedings on the defendant outside of the jurisdiction. If the court grants permission for this and the proceedings are duly served outside of the jurisdiction, then this gives the courts of England and Wales (in principle) the jurisdiction to determine the claim.

In order to obtain permission, three matters must be established (CPR 6.37):

1 The claimant needs to establish one of the grounds in 6B PD 3.1;

2 The claim must have reasonable prospects of success;

3 England and Wales must be the ‘proper place’ in which to bring the claim.

If these three matters are established, then the court may grant permission for service outside of the jurisdiction.

Question 10

Permission – grounds in 6B PD 3.1

Answer 10

There are many grounds in 6B PD 3.1 on which an application for permission to serve outside of the jurisdiction can be based. Amongst the most important are:

A claim is made for a remedy against a person domiciled within the jurisdiction (1).

A claim is made in respect of a contract where the contract (6) –

(a) was made within the jurisdiction;

(c) is governed by English law; or

(d) contains a term to the effect that the court shall have jurisdiction to determine any claim in respect of the contract.

A claim is made in respect of a breach of contract committed within the jurisdiction (7).

A claim is made in tort where (9)

(a) damage was sustained, or will be sustained, within the jurisdiction; or

(b) damage which has been or will be sustained results from an act committed, or likely to be committed, within the jurisdiction.

These grounds are sometimes referred to as ‘jurisdictional gateways’.

Question 11

Permission – reasonable prospects of success

Answer 11

The second matter that must be established is a reasonable prospect of success.

This is a relatively low threshold and has been equated to the prospect of success needed to resist an application for summary judgment: De Molestina v Ponton [2002] 1 Lloyd’s Rep 271.

Question 12

Permission – England and Wales is the ‘proper place’

Answer 12

The third matter that must be established is that England or Wales is the proper place in which to bring the claim – sometimes referred to as the forum conveniens (convenient / appropriate forum).

England or Wales can be the proper place to bring the claim if it is the natural place to bring the proceedings, perhaps because the witnesses are based there, English law applies and/or the defendant is normally resident in England / Wales.

If England or Wales is not the natural place, but rather another jurisdiction is the natural place, the Courts of England and Wales can still be the proper place in which to bring the claim if justice nonetheless requires that the claim be tried in England – perhaps because there is a risk of improper government interference in a different jurisdiction, or some other reason why the trial will not be fair.

Question 13

Jurisdiction clauses

Answer 13

Finally, the claimant can serve the claim form on a defendant outside the jurisdiction without the court’s permission where a contract contains a term to the effect that the courts of England and/or Wales shall have jurisdiction to determine that claim (CPR 6.33(2B)).

This provides protection in the same area as the Hague Convention (addressed in a different element). However, the Hague Convention only applies to exclusive choice of court agreements concluded on or after 1 October 2015. If the agreement was concluded before this date, or does not give jurisdiction to the courts of England and Wales exclusively, then the Hague Convention does not apply, and this rule provides an alternative route to establishing jurisdiction (CPR 6.33(2B)).

Question 14

Serving a claim form outside the jurisdiction

Answer 14

Where a claim form has validly been issued, the period for service is six months where the claim form is to be served outside the jurisdiction (CPR 7.5(2)).

This gives the claimant a longer period than when a claim form is to be served within the jurisdiction, where it is normally valid for only four months (CPR 7.5(1)).

Question 15

Service out – permission

Answer 15

By way of a brief reminder, it is not necessary to seek the court’s permission to serve proceedings out of the jurisdiction if the Courts of England and Wales have jurisdiction because:

a. the Hague Convention on Choice of Court Agreements gives the court jurisdiction; or

b. a contract contains a term to the effect that the Courts of England and/or Wales shall have jurisdiction to determine the claim

(CPR 6.33(2B)).

Permission of the court will be required to effect service in other circumstances.

Question 16

Service out - procedure

Answer 16

If a claimant is seeking to serve an English claim form abroad without permission, it must file Form N510 when it issues and files its claim form. This essentially confirms to the court the basis upon which it has jurisdiction over a foreign-domiciled defendant in circumstances where the court’s permission has not been sought to serve the claim form abroad. (CPR 6.34).

If seeking to serve an English claim form abroad with permission, the claimant will have to make an application to court, asking the court to allow it to serve the claim form on the defendant. This will be an interim application made pursuant to the usual rules (CPR 23) using the usual application notice in Form N244.

Question 17

Service outside the UK - methods

Answer 17

Whether or not permission is needed, there are a number of possible methods of service for service outside the UK. (CPR 6.40) Nothing in the rules (or in any court order) shall authorise or require any person to do anything in the destination country which is against the law of that country.

The methods of service to choose from when serving outside the UK include:

• Service in accordance with an agreed regulation, convention or treaty. Any regulation, convention or treaty in relation to service referred to in this element will only apply to whichever countries have contracted into it, along with the UK.
• Service through the government of the destination country (if that government is willing to do this).
• Service by any method permitted by the law of the destination country. In practice, it is often preferred to take local advice in the destination country and engage a local agent to effect service by a method which is permitted there.

Question 18

Response times

Answer 18

Extended periods for filing an acknowledgment of service/defence apply when the claim form/ particulars of claim have been served out of the jurisdiction. The amount of ‘extra time’ allowed will vary, depending on which country is involved.

Question 19

Difficulties with service

Answer 19

Sometimes, it is not possible to serve effectively through anyof the usual methods, whether within or outside of the jurisdiction. The rules therefore allow for an application to the court for an order to deal with this type of situation where this is justified. This will also be considered in this element.

In appropriate / exceptional circumstances, the only way to serve effectively, or achieve the certainty required might be to make an application to the court for one of the following orders:

1 An order for alternative service (CPR 6.15); or

2 An order dispensing with service (CPR 6.16).

Alternative service

The court may permit service by an alternative method if there is good reason to do so, ie where the other available methods of service would be ineffective or impossible.

An application must be made to court setting out why service in accordance with the methods listed in the CPR are not possible or why attempts to serve in accordance with these methods have been unsuccessful. The application should state the alternative method proposed.

Examples of alternative service methods are: (i) serving on solicitors acting for a party where the solicitor has not been authorised to accept service; and (ii) placing an advert in a newspaper notifying the defendant that proceedings have been commenced against it.

The court may order that steps already taken to bring the claim form to the attention of the defendant by an alternative method or at an alternative place is good service.

Alternative service cannot be used retrospectively and it cannot be used to remedy irregular service.

Dispensing with service

The court may dispense with service of a document. This discretion is usually only exercised where the other side is already aware of the document.

Example: if the claimant wished to make an amendment to its particulars of claim and the defendant agreed to that amendment being made, the claimant would need to make an application to court to amend the document.

If the court agreed to the amendment being made, it might dispense with service, ie order that the claimant does not have to serve the document on the defendant, because the defendant is aware of the amendment.

It is very rare for the court to dispense with service of a claim form where the other party is not aware of the proceedings.

Question 20

Disputing the court’s jurisdiction

Answer 20

A party on receipt of court proceedings may wish to challenge the English / Welsh court’s jurisdiction to hear a dispute – either by arguing that the court does not have jurisdiction at all, or that the court should decline to exercise its jurisdiction. This might happen for a variety of reasons, for example:

1 The claimant alleges that the court has jurisdiction pursuant to a convention such as the Hague Convention on Choice of Court Agreements but the defendant disputes this.

2 The claimant has obtained for permission to serve proceedings out of the jurisdiction, but the defendant considers that none of the gateways for obtaining such permission (6B PD 3.1) are satisfied and/or the courts of England and Wales are not the proper place for the claim to be heard.

3 The proceedings have been served on the defendant within the jurisdiction, but there is another more appropriate forum.

Question 21

Substance of the objection

Answer 21

The substance of the defendant’s objection depends on the grounds that the claimant is relying on to establish jurisdiction.

For example, the defendant may challenge the allegation that the claim falls within the Hague Convention or the way that the Hague Convention has been interpreted. It could challenge that the common law rules apply, or that a gateway (6B PD 3.1) is established.

It could argue that England and Wales is not the proper place for the claim to be heard.

The fact that the court has determined that England and Wales is the proper place for the claim to be heard when granting permission does not prevent the defendant from, upon receipt of proceedings, seeking to argue that England and Wales is not the proper place for the claim to be heard.

Question 22

Procedure

Answer 22

The procedure for disputing the court’s jurisdiction involves the following key points:

1 The defendant must first file an acknowledgement of service (CPR 11(2)) – there is a box on the acknowledgement of service to indicate that the defendant intends to contest jurisdiction.

2 The defendant must then apply within 14 days after filing the acknowledgement of service, disputing the court’s jurisdiction. That application must be supported by evidence.

Question 23

Submitting to the court’s jurisdiction

Answer 23

Submitting to the court’s jurisdiction can be considered the opposite of disputing it. If a party submits to the jurisdiction of the Courts of England and Wales, then they cannot later dispute that jurisdiction, so effectively the court’s jurisdiction is established.

To avoid submitting to the court’s jurisdiction, a defendant served with proceedings must not take any steps to engage with the proceedings beyond filing an acknowledgement of service and then applying to court to challenge its jurisdiction, as set out earlier in this element. The party must not, for example, file a defence.

Of course, it may be that a party is content for proceedings to continue before the Courts of England and Wales, in which case it will be content to submit to the proceedings, and in that way, the court’s jurisdiction is established.

Question 24

Conflict of laws: contract

Answer 24

Prior to Brexit, the majority of contractual disputes were governed by Regulation 593/2008 which is referred to as the Rome I Regulation (‘Rome I’). At the end of the post-Brexit transition period on 31 December 2020 Rome I was adopted into English law, with minor amendments, by the Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019 and the Jurisdiction, Judgments and Applicable Law (Amendment) (EU Exit) Regulations 2020.

Accordingly, the relevant law is, broadly, the Rome I Regulation. In this element we use the term ‘Rome I’ to refer to the regulation as amended and retained in the law of England and Wales, and article references are references to this amended Rome I.

Note that:

1 There are some areas of law which are excluded from Rome I (Article 1);

2 Rome I does not apply to contracts entered into before 17 December 2009;

3 There are special provisions in Rome I for contracts of carriage, consumer contracts, employment contracts and insurance contracts.

Question 25

The parties’ choice

Answer 25

Firstly, the parties are free to choose which country’s law will apply (Article 3). In the vast majority of cases this will be done expressly in the contract which is at stake in the dispute. This is known as a ‘choice of law’ clause. The choice can also be ‘demonstrated by… the circumstances of the case’, and the choice can be made at any time – for example, after the dispute has arisen.

Question 26

Articles 4(1)(a) to (h) – types of contract

Answer 26

In the absence of choice, you must consider Articles 4(1)(a) to (h) which set out various types of contract and the laws that will apply. The most important are the following:

Sale of goods contract: applicable law is that of the seller’s habitual residence*

Provisions of services contract: applicable law is that of the service provider’s habitual residence*

Contract relating to land: applicable law is that where the land is situated

Distribution contract: applicable law is that of the distributor’s habitual residence*

• A company’s habitual residence is where its ‘central administration’ is. For a natural person acting in the course of business, it is where that person’s principal place of business is.

Question 27

Articles 4(2) – characteristic performance

Answer 27

What if there is no choice, and the contract does not fall into the categories in articles 4(1)(a) to (h) (and remember we only set out four of those on the previous slide)?

In that case, the applicable law is the law of the country where the party required to effect characteristic performance of the contract has its habitual residence. Which party is giving the performance which gives the character its character? In a contract where one party is paying the other party for something, it is generally the party doing the ‘something’ which is giving the contract its character, not the party making the payment.

Question 28

Articles 4(3) – manifestly more closely connected

Answer 28

If the applicable law has been determined under Article 4(1) or 4(2), the court will apply a different country’s law if the contract is manifestly more closely connected with that other country. It is to be expected that this provision will not be used lightly as otherwise it could introduce great uncertainty into the operation of Rome I.

Question 29

Conflict of laws: tort

Answer 29

Prior to Brexit, the majority of tortious disputes were governed by Regulation 864/2007 which is referred to as the Rome II Regulation (‘Rome II’). At the end of the post-Brexit transition period on 31 December 2020 Rome II was adopted into English law, with minor amendments, by the Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc) (EU Exit) Regulations 2019 and the Jurisdiction, Judgments and Applicable Law (Amendment) (EU Exit) Regulations 2020.

Accordingly, the relevant law is, broadly, the Rome II Regulation. In this element we use the term ‘Rome II’ to refer to the regulation as amended and retained in the law of England and Wales, and article references are references to this amended Rome II.

Note that:

1 There are some areas of law which are excluded from Rome II (Article 1);

2 Rome II only applies to events giving rise to damage which occurred on or after 10 January 2009;

3 There are special provisions in Rome II for product liability, unfair competition, environmental damage, infringement of intellectual property and industrial action.

Question 30

The parties’ choice

Answer 30

Firstly, the parties are free to choose which country’s law will apply (Article 14).

If the agreement is entered into after the event giving rise to the tortious damage, then this choice will be effective.

If the agreement is entered into before the event giving rise to the tortious damage, then this choice will only be effective if both parties are pursuing a commercial activity and freely negotiated the choice of law

The choice can be express, for example, in a contractual term between the parties, or choice can be ‘demonstrated by… the circumstances of the case’.

Question 31

Parties resident in the same country

Answer 31

A company’s habitual residence is where its ‘central administration’ is. For a natural person acting in the course of business, it is where that person’s principal place of business is.

So in the absence of choice, if the claimant and defendant both reside in the same country, then that country’s laws will apply – even if the damage happened in a different country (Article 4(2)).

Where there is no valid choice and the claimant and the defendant do not reside in the same country, the applicable law is that of the country in which the damage occurs – not where the event giving rise to damage occurs, nor where indirect consequences might occur (Article 4(1)).

In cases of personal injury or damage to property, the country in which the damage occurs is very likely to be the country where the injury was sustained or where the property was damaged.

Question 32

General rule – law of the country where the damage occurs

Answer 32

Where there is no valid choice and the claimant and the defendant do not reside in the same country, the applicable law is that of the country in which the damage occurs – not where the event giving rise to damage occurs, nor where indirect consequences might occur (Article 4(1)).

In cases of personal injury or damage to property, the country in which the damage occurs is very likely to be the country where the injury was sustained or where the property was damaged.

Question 33

Article 4(3) – manifestly more closely connected

Answer 33

Even if the applicable law has been determined under Article 4(1) or 4(2), the court will apply a different country’s law if the tort is manifestly more closely connected with that other country. It is to be expected that this provision will not be used lightly as otherwise it could introduce great uncertainty into the operation of Rome II.

Question 34

Jurisdiction

Answer 34

The situation in relation to jurisdiction is more complicated. When this topic was introduced in an earlier element, we explained that where proceedings are commenced on or after 1 January 2021, the question of whether the courts of England and Wales have jurisdiction must be answered by reference to the Hague Convention on Choice of Court Agreements, if it applies, and otherwise by applying common law rules. However, when the defendant is based in the UK in Scotland or Northern Ireland, the question of whether the courts of England and Wales have jurisdiction is governed primarily by the Civil Jurisdiction and Judgments Act 1982 (the ‘Act’) (s.16 and schedule 4 of the Act).

The most important provisions of that Act are summarised in the following pages. Section numbers are references to sections of the Act unless otherwise stated. The Act contains detail beyond that included in these pages which could be relevant on the facts of a particular case, including special rules for consumer contracts and employment contracts which are beyond the scope of this element.

Question 35

Exclusive jurisdiction, jurisdiction agreements and submission

Answer 35

Exclusive jurisdiction

In relation to some particular types of dispute, the Act provides that one part of the UK, and only that part, can have jurisdiction (schedule 4, rule 11).

Perhaps the most important example is that in proceedings which are concerned with real property or tenancies in real property, the part of the UK in which the property is situated will have exclusive jurisdiction (there are slightly different rules for tenancies of 6 months or less for temporary private use).

Jurisdiction agreements

Where the parties agree that a particular part of the UK will have jurisdiction, then that part will have jurisdiction (schedule 4, rule 12).

Submission

If a party submits to the jurisdiction of a court in the UK, for example by filing a defence rather than contesting jurisdiction, then that court will have jurisdiction (schedule 4, rule 13) – although this cannot override the exclusive jurisdiction rules above.

Question 36

Basic rule – sue where D is domiciled

Answer 36

If none of the above apply, then the starting point is that a person domiciled in a part of the UK should be sued in the courts of that part (schedule 4, rule 2).

Broadly speaking, a person is domiciled in a part of the UK if they are resident there and the nature and circumstances of their residence indicate they have a substantial connection with that part (s.41).

A company is domiciled where its ‘seat’ is, and a company will generally have its seat where it has its registered office, or if it has none, where it was incorporated (s.42 and s.42A).

Question 37

Additional jurisdiction

Answer 37

A person can be sued in parts of the UK in which they are not domiciled in the following circumstances (schedule 4, rules 3 and 5):

• in matters relating to a contract, in the courts for the place of performance of the obligation in question;
• in matters relating to tort, in the courts for the place where the harmful event occurred or may occur;
• as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated;
• where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together;
• on a counter-claim arising from the same contract or facts on which the original claim was based, in the court in which the original claim is pending.