Commercial Practice - Jurisdiction & Governing Law

Question 1

What is jurisdiction? (1)

Answer 1

The official power of a court to make legal decisions and judgements.

Question 2

What is governing law? (1)

Answer 2

The law that will be applied by the court which hears a claim made under a contract.

Question 3

What is exclusive jurisdiction? (1)

Answer 3

A court has exclusive jurisdiction if it the only court competent to hear disputes relating to a matter.

Question 4

What is non-exclusive jurisdiction? (1)

Answer 4

A court has non-exclusive jurisdiction over a matter if it may hear disputes relating to that matter, but another court may also be competent to do so.

Question 5

Should you settle the issue of governing or jurisdiction first? (1)

Answer 5

Jurisdiction.

Question 6

What stage of the contract should jurisdiction and governing law be considered? (2)

Answer 6

At the negotiation stage and provided for when the contract is drafted, to prevent uncertainty and further problems in the event that any contractual dispute arise.

Question 7

What is a jurisdiction clause? (3)

Answer 7

Also known as choice of court clauses and they avoid long and costly disputes over where any dispute should be heard, parties to a commercial contract should include a jurisdiction clause.

Question 8

What is an international agreement? (1)

Answer 8

Sale of goods between at least one English party and at least one party located within the EU.

Question 9

What is an exclusive jurisdiction clause? (2)

Answer 9

A clause which designates the courts of one particular jurisdiction, to the exclusion of all others, to hear any disputes under the contract.

Question 10

What is a non-exclusive jurisdiction clause? (2)

Answer 10

A clause which may designate two or more jurisdictions that can be chosen to hear any dispute under the contract, or according to the type of dispute between the parties or depending on which party is bringing the claim

Question 11

What happens if there is no jurisdiction clause? (1)

Answer 11

Contract is said to be silent as to jurisdiction.

Question 12

What does the Hague Convention apply to? (4)

Answer 12

1. In international cases
2. Where there is an exclusive choice of court clause (exclusive jurisdiction clause)
3. Contained in a written agreement involving at least one party from a Contracting State
4. Which designates the courts of a Contracting State

Question 13

What happens if the Hague Convention applies? (4)

Answer 13

The court designated in the exclusive choice of court must accept jurisdiction to decide a dispute to which the agreement applies - Article 5. If proceedings are brought in a court other than that designated in the clause, then that court must suspend or dismiss the proceedings - Article 6.

Question 14

What should we ask ourselves regarding the Hague Convention? (5)

Answer 14

1. Does the scenario relate to an international sale of goods contract?
2. Does the contract contain an exclusive choice of court clause?
3. Is the clause in writing?
4. Does the clause give exclusive jurisdiction to the courts in the UK or an EU member state?
   If no consider common law.

Question 15

When will common law apply to the contract? (3)

Answer 15

If the contract contains a non-exclusive jurisdiction clause, in which case the English courts are likely to give effect to the parties’ choice, it is impossible to predict if the English courts will accept or reject jurisdiction.

Question 16

What are the three ways the English courts will accept jurisdiction in the absence of an agreement between the parties? (3)

Answer 16

1. When the defendant is present within the jurisdiction of England and Wales when proceedings are issued.
2. When the defendant submits to the jurisdiction of England and Wales when proceedings are issues.
3. With the court’s permission.

Question 17

What is forum conveniens? (2)

Answer 17

Convenient forum / appropriate forum, courts will take into account all the factors of a case to decide if an English Court is the most appropriate to hear the dispute.

Question 18

Who determines the issue of governing law? (1)

Answer 18

The law of whichever country has jurisdiction.

Question 19

What is used in England and Wales to decide governing law? (1)

Answer 19

Rome I Regulation.

Question 20

How do we determine if the Rome I Regulation applies? (2)

Answer 20

Consider Article 1 which provides that it will apply where there is a ‘conflict of law’ relating to ‘contractual obligations’ in ‘civil and commercial matters.’

Question 21

What does Article 3 state? (1)

Answer 21

If the Rome I Regulation applies, the contract shall be governed by the law chosen by the parties.

Question 22

When does Article 4 apply? (1)

Answer 22

In the absence of an express choice of governing law.

Question 23

What does Article 4(1)(a) state? (1)

Answer 23

The law applicable to a contract for the sale of goods is the law of the country where the seller has its habitual residence.

Question 24

Where can the definition for habitual residence be found? (1)

Answer 24

Rome I Regulation Article 19.