DAMAGES FOR BREACH OF
A CHOICE-OF-COURT AGREEMENT
Koji TAKAHASHI∗

I.
II.
III.

IV.
V.
VI.
VII.

VIII.

IX.
X.
XI.
XII.
XIII.
XIV.

Introduction
What Constitutes a Breach of a Choice-of-court Agreement?
Categories of Cases
A.
The First Category of Cases
B.
The Second Category of Cases
An Overview of the Case Law
Is the Question Procedural or Substantive?
The Legal Basis of the Claim
Availability of the Remedy in the Forum First SeisedA.
The First Category of Cases
B.
The Second Category of Cases
Availability of the Remedy in Another Forum
A.
Finality of the Settlement of a Jurisdictional Battle
1.
Pleas of res judicata
2.
General Principles of Procedure Law
B.
Comity towards the Court First Seised
1.
The First Category of Cases
2.
The Second Category of Cases
Comparison with an Antisuit Injunction
Quantification of Damages
Duty to Mitigate Loss
Express Clause on Damages
Dichotomy Between the Common Law and the Civil Law
Conclusion∗
Professor of Law at the Doshisha University Law School (Japan). The author had
an opportunity to present a paper on this subject at the 114th biannual conference of theJapanese Private International Law Association (Autumn of 2006). The paper has been
published in Japanese as ‘Kankatsu Gôi Ihan no Songai Baishô [Damages for Breach of
Jurisdiction Agreement]’, in: Kokusai Shiô Nenpô [Japanese Yearbook of Private
International Law] 2007/9, pp. 104-162. The present article is a revised version of a part ofthe original.

Yearbook of Private International Law, Volume 10 (2008), pp. 57-91© sellier. european law publishers & Swiss Institute of Comparative Law

Printed in Germany

Koji Takahashi

I.

Introduction

The idea of awarding damages for breach of a choice-of-court agreement is abrainchild of the common law system. It is not featured in the 2005 Hague Convention on Choice of Court Agreements nor has it been discussed by thedraftsmen.1 The remedy is at an early stage of development and there are as yet few
in-depth scholarly analyses of the issue2 The present article will try to articulate
and analyse a variety of issues surrounding this remedy,3 such as those related toprocedural law, substantive law, private international law, international comity,
and comparative law. The materials for discussion will be largely drawn from thecommon law jurisdictions where this remedy has been tested and is evolving. But
references are also made to the viewpoints of the civil law system, in particular
Japanese law, as well as EU law.

II.

What Constitutes a Breach of a Choice-of-court
Agreement?

At the outset, we must be in agreement as to what is meant by ‘a breach of achoice-of-court agreement’ since the courts of different countries may disagree
whether there is a breach. More specifically, they may take different views withrespect to the same choice-of-court agreement regarding whether it exists at all,4
whether it is substantively and formally valid, whether it is exclusive or nonexclusive, what parties are bound by it,5 what claims are subject to it,6 and which1

See the text of the Convention as well as HARTLEY T./DOGAUCHI M., ‘Explanatory
Report on the 2005 Hague Convention on Choice of Court Agreements’ (2007).
2
The commentaries making some reference to this remedy include: TAN D.,‘Enforcing International Arbitration Agreements in Federal Courts: Rethinking the Court's
Remedial Powers’, in: Va. J. Int'l L. 2007, p. 545 et seq.; DUTSON S., ‘Breach of an Arbitration or Exclusive Jurisdiction Clause: the Legal Remedies if it Continues’, in: Arbitration
International 2000, p. 89 et seq.; KNIGHT C.J.S., ‘The Damage of Damages: Agreements on
Jurisdiction and Choice of Law’, in: Journal of Private International Law 2008, p. 501 et
seq. as well as other materials cited in this article.
3
The topic of damages for breach of an arbitration agreement merits a separate
analysis, although it shares many issues with the topic of the present article and is treated
without distinction in some primary and secondary materials.
4e.g. whether a bill of lading contains a choice-of-court agreement throughincorporation by reference from a charterparty.
5e.g. whether a choice-of-court agreement in a bill of lading is binding on thetransferee of the bill.
6
e.g. whether a claim in tort is covered.

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Damages for Breach of a Choice-of-court Agreement
forum it specifies.7 The divergence of opinion on those issues may arise as thecourts of different countries may apply different laws to them8, or construe differently the same legal provisions, or rely on their forum-specific ordre public(public policy) to exclude the application of foreign laws, or apply different ruleson the burden or standard of proof.9
For the purpose of the present article, there is a ‘breach of a choice-of-court
agreement’ if in the eyes of the court before which a claim for damages is made,10
there is a valid and exclusive choice-of-court agreement and it has been broken by
the institution of an action in a non-chosen forum. It is irrelevant whether the court
seised of the action takes the same view. Nor is it relevant if the plaintiff, whenbringing the action, believed that the agreement was invalid or non-exclusive.11
It is not possible to conceive of a breach of a non-exclusive choice-of-court
agreement since such an agreement only operates to increase options for the plaintiff. A choice-of-court agreement specifying two or more courts – for example, anagreement giving jurisdiction to the New York courts and the English courts – is an
exclusive agreement for the purpose of the present analysis if it purports to exclude
the jurisdiction of all other courts. An asymmetric choice-of-court agreement - forexample, an agreement in a loan contract providing that the lender may bring anaction against the borrower in the English courts or any other courts having jurisdiction, while the borrower may bring an action against the lender only in the
English courts – is exclusive to the extent it operates to exclude the jurisdiction of
non-chosen courts, i.e. in the example just given, to the extent it excludes the jurisdiction of non-English courts in an action against the lender.
Throughout this article, the phrases ‘the forum first seised’ and ‘the court
first seised’ will be used as shorthand expressions to refer to the forum and thecourt seised of the action alleged by the defendant to have been brought in breach
7

E.g. which forum is specified by a choice-of-court agreement designating the principal place of business which, in the circumstances, could be localised in different countries.
8
Thus, under some legal systems, a choice-of-court agreement in a consumer contract or an employment contract may be valid only if it is concluded after a dispute hasarisen. It may also be that such an agreement is exclusive only when it is asserted against theconsumer or employee.
9
In some countries, the courts ascertain jurisdiction ex officio while in others, theburden of proof would be imposed on the parties.
10
It is not necessarily the court chosen by the choice-of-court agreement since othercourts may also have jurisdiction to hear the claim for damages.
11
The court’s finding may therefore sometimes come as a surprise to the parties. But
such a result is by no means unique to the situation treated here. Rather, in theory, it could
happen with respect to all legal issues. That is because the same set of facts may be given
different legal meanings in different countries due to their different choice-of-law rules.
Thus, for example, a party to a contract which he genuinely believed to be null and void inaccordance with the law applicable to it in the country where he has conducted himself may
be held liable, to his dismay, for failure to perform the obligations under that contract inanother country where the same contract is deemed to be valid under a different law which,in accordance with the choice-of-law rules of that country, is the governing law.

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Koji Takahashi
of a choice-of-court agreement. This terminology is adopted in view of the fact thata subsequent claim for damages will often, though not invariably, 12 be brought
before a court of another forum.

III. Categories of Cases
The cases in which damages may be claimed for breach of a choice-of-court
agreement may be divided into two categories. They will be illustrated below byreference to the leading English cases. The differences between those two categories lie in the response of the court first seised to the allegation that the action
has been brought in breach of a choice-of-court agreement. The categorisation
along this line will be useful since material differences arise between those twocategories as regards, inter alia, the availability of the remedy of damages in the
court first seised, the preclusion of the damages claim in another forum under the
principles of res judicata, implications for international comity towards the court
first seised, and the quantification of damages. Those issues will be discussed in
the remainder of the present article.

A.

The First Category of Cases

In this category of cases, unlike the second category, the court seised of an action
finds that it has been brought in breach of a choice-of-court agreement and accordingly refuses to hear the case by either dismissing or staying its proceedings. The
defendant may then make a claim for damages for the breach in order to recoverfrom the plaintiff the costs he has incurred in disputing the jurisdiction. The practical importance of such a claim cannot be underestimated because the lawyers’
fees which form the largest part of costs can be expensive.13 If the defendant has
12

See Section VII below for the availability of the damages claim in the forum firstseised.
13
In Union Discount Co v. Zoller [2002] 1 W.L.R. 1517 para. 32, the English Courtof Appeal, while conceding that the state's legal resources should be devoted to central
rather than parasitic questions, noted that the amount of costs at stake could be much larger
than the sums claimed on the merits. This reasoning can be contrasted with the decision of
the Court of First Instance of the Republic and Canton of Geneva Judiciary on 2 May 2005
(C/1043/2005-15SP) ASA Bull. 2005, p. 728. In this case, the Swiss court was asked to issue
an anti-arbitration injunction to restrain arbitration proceedings which the petitioner alleged
to have been commenced in breach of a choice-of-court agreement. The petitioner
contended that the breach would trigger huge attorneys' fees, a loss difficult to be madegood. Under the applicable rules of the arbitration, each party was to bear its own attorneys'
fees. The court, however, reasoned that the alleged loss would be insignificant since thearbitration would be short if the arbitral tribunal denied its jurisdiction. It therefore left thetribunal to decide on its jurisdiction under the principle of compétence-compétence.

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Damages for Breach of a Choice-of-court Agreement
been allowed to recover some of his costs14 from the plaintiff by a costs order, hewill limit his damages claim to the remainder.
The leading case for this category is Union Discount Co. v. Zoller.15 In thatcase, the English Court of Appeal held that the defendant to a New York action (anaction which had been struck out as an action brought in breach of an English
choice-of-court agreement) was entitled to recover, as damages for breach of theagreement, the costs incurred in disputing the jurisdiction of the New York court,
which the New York court had not awarded under what is known as the ‘American
rule’ of costs.16
Since such a damages claim seeks to compensate for the loss which would
not be sustained but for the breach, there is no reason for it to be barred merely
because the court chosen by the choice-of-court agreement would not, in general,
allow a prevailing party to recover his costs from his opponent by a costs order.
Thus in Indosuez International Finance B.V. v. National Reserve Bank,17 the New
York court held that allowing the recovery of costs incurred in Russia as damages
would not contradict the American rule of costs.

B.

The Second Category of Cases

In this category of cases, unlike the first, the court seised of an action, notwithstanding that the defendant alleges that it has been brought in breach of a choiceof-court agreement, decides to hear the case on the merits by refusing to dismiss or
stay its proceedings. On the merits of the case, too, the court may rule in favour ofthe plaintiff. The court may also make a costs order either allowing the defendant
to recover all or part of his costs from the plaintiff or allowing the plaintiff to do
the same from the defendant.
14
A full recovery may not be awarded in respect of, for example, fees charged byforeign lawyers. In a case decided on 8 March 2005 by the German Federal Supreme Court(Bundesgerichtshof ) (Case VIII ZB 55/04, [2005] I.L.Pr. 54), both parties claimed the costsof their respective English correspondence lawyers, whose fees, charged at an hourly rate,
reached levels much higher than those payable under German rules to German lawyers for asimilar service. The court, while acknowledging that the introduction of the English correspondence lawyers into the case was appropriate for the proper pursuit or defence of the case,held that the costs of foreign correspondence lawyers were to be reimbursed only up to theamount chargeable by German lawyers.
15[2002] 1 W.L.R. 1517 (CA) (The first instance decision is unreported).
16
The costs rules vary depending on the forum. Thus in England, the winning party
can generally, but not fully in all cases, recover the costs from his opponent whereas hecannot generally do so in the U.S. and in Japan. In Japan, Article 61 of the Code of Civil
Procedure imposes costs on the losing party but the costs within the meaning of that provision cover only filing fees and not the lawyer’s fees: Article 2 of the Act on Legal Costs[Minji Hiyô Tou ni Kansuru Hôritsu].
17
758 N.Y.S.2d 308 (N.Y. App. Div. 2003). To the same effect, see also El Paso
Natural Gas Co. v. TransAmerican Natural Gas Corp., 669 A.2d 36, 40 (Del.1995); Cornerstone Brands, Inc. v. O’Steen 2006 WL 2788414 (Del.Ch.).

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Koji Takahashi
The defendant may then make a claim for damages for breach of a choiceof-court agreement in order to recover from the plaintiff the costs which he has
incurred in disputing the jurisdiction and the merits. If he has already been awarded
by a costs order any part of his costs, he will limit his damages claim to theremainder of his costs. If, on the contrary, he has been compelled by a costs orderto pay any part of the plaintiff’s costs, he may seek to claw back the sum he has
paid as well as to seek recovering his own costs from the plaintiff. In addition, hemay seek to claw back any sum which he has been ordered to pay by a judgmenton the merits.
In this category of cases, the court first seised, in deciding to hear the caseon the merits, will generally find that there is no breach of a choice-of-court
agreement. But there may be exceptional cases where the court finds that there is abreach of what it finds to be a valid agreement but nevertheless exercises whatever
discretion it has to refuse to dismiss or stay its proceedings.18 The court may do so,for example, where the time-bar applicable in the chosen forum has expired and thecourt finds that the plaintiff has not acted unreasonably in failing to bring an actionin that forum within the time limit.19 Other examples may arise where the action
involves multiple parties, some of whom are not bound by the choice-of-court
agreement. The court may in such cases decide to hear the case on the merits withrespect also to the parties bound by the choice-of-court agreement, so that it can
exercise jurisdiction over the entirety of the action. A court seised of an action
brought by a consumer against a business party in breach of their choice-of-court
agreement may also decide to hear the case on the merits, if the agreement is contained in an adhesion contract20 or if the consumer would effectively have to giveup litigating in the chosen forum because a class action or a similar procedure facilitating a large number of small claims is not available in that forum.21
18
E.g. The Eleftheria [1970] P. 94, in which it was established that the English
courts had discretion not to stay proceedings where the plaintiff could show a strong case forsuing in England in breach of a foreign choice-of-court agreement.
19
See e.g. Baghlaf Al Safer Facrory Co. v. Pakistan National Shipping Co., [1998] 2
Lloyd's Rep. 229, in which the English Court of Appeal held that where the plaintiff had
acted reasonably in commencing proceedings in England and in allowing the time-bar to
expire in the foreign forum chosen by his choice-of-court agreement, a stay of the English
proceedings should only be granted on terms that the defendant waived the time bar in theforeign forum.
20
SHANTAR N., ‘Forum Selection Clauses: Damages in Lieu of Dismissal?’, in:Boston U.L. Rev. 2002, pp. 1063, 1078 et seq., suggests that in such cases the court mightrefuse to decline jurisdiction and consider awarding the business party damages in respect of
the added costs of defending in the non-chosen forum, provided that consumers are able toshow a sufficient likelihood of winning the case and their ability to pay the damages.
21
In America Online v. Booker (781 So. 2d 423, Fla. Dist. Ct. App., 2001), America
Online's terms of service agreement contained a choice-of-court agreement requiring its
subscribers to bring all claims against it in Virginia where it had its principal place of business. But Booker and other subscribers brought an action and moved for a class certificationin Florida since class actions were not available in Virginia.

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Damages for Breach of a Choice-of-court Agreement
The leading case for this category is Donohue v. Armco Inc.22 In that case,an application was made in England for an antisuit injunction restraining a New
York action which was alleged to have been brought in breach of an English
choice-of-court agreement. The House of Lords refused to grant the application
after the respondent (i.e. the plaintiff of the New York action) made a concessionthat he would be liable in damages for breach of the choice-of-court agreement if
the petitioner (i.e. the defendant of the New York action) were to incur greater costor liability in New York than he would in England. Among the judges, Lord
Hobhouse accepted this concession as well-founded albeit acknowledging that it
involved complex problems.

IV. An Overview of the Case Law
In England, where an action is brought in breach of a foreign choice-of-court
agreement, the normal relief is the stay of proceedings. On the other hand, wherean action is brought abroad in breach of an English choice-of-court agreement, thenormal relief in England is an antisuit injunction.23 In neither case has the remedyof damages for breach of a choice-of-court agreement been traditionally available.
But some commentators have been suggesting for some time that in such cases itshould be possible to award damages.24 Around the turn of the millennium, in a few
cases such as those seen in Section III above where an action was brought abroadin breach of an English choice-of-court agreement, the English courts haveawarded damages in the first category of cases25 and indicated the availability of
the remedy in the second category.26 In more recent cases, the English courts haveshown more willingness to grant the remedy, to the point where it has been
observed by one commentator that the remedy has gone from novelty to banality.27
Thus, in A/S D/S Svendborg v. Akar,28 the court held that the decision in the Zoller
22[2002] 1 All ER 749 (HL) para. 48.
Continental Bank NA v. Aeakos SA [1994] 1 W.L.R. 588, 598 (CA); The Jay
Bola [1997] 2 Lloyd's Rep 79; OT Africa Line Ltd v. Magic Sportswear Corp [2005]
EWCA Civ 710 para. 33.
24
E.g. PEEL E., ‘Exclusive jurisdiction agreements: purity and pragmatism in theconflict of laws’, in: L.M.C.L.Q. 1998, pp. 182, 224-6; MALES S., ‘International comity andantisuit injunctions’, in: L.M.C.L.Q. 1998, pp. 543, 550; BRIGGS A./REES P., Civil Jurisdiction and Judgements, 2nd ed., London 1997, para. 4-22.
25
Union Discount Co Ltd v. Zoller [2002] 1 W.L.R. 1517(CA).
26
See Donohue v. Armco Inc [2002] 1 All ER 749 (HL).
27
BRIGGS A., The Agreements on Jurisdiction and Choice of Law, Oxford 2008,
para. 8.14. This book contains in its chapter 8 an inspirational discussion of the topic of thepresent article.
28[2003] EWHC 797 at para. 37.
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Koji Takahashicase had confirmed the principle that reasonable costs incurred in an action brought
in breach of a choice-of-court agreement could be recoverable as damages for thatbreach. In A v. B (No. 2),29 Colman J. said that he had not previously encountered
the practice of awarding costs where there was a breach of a choice-of-court
agreement but acknowledged obiter that there was some sensible foundation to do
so. In Sunrock Aircraft Corporation Ltd v. Scandinavian Airlines System DenmarkNorway-Sweden,30 the Court of Appeal held obiter that damages for breach of achoice-of-court agreement are an established remedy. In National Westminster
Bank Plc v. Rabobank Nederland (No. 3),31 it was held, in broad language capableof covering the case of a breach of a choice-of-court agreement, that damages
would be awarded for the costs incurred in restraining Californian proceedings32
which had been brought in breach of an antisuit agreement, i.e. agreement not tobring any action.
A complete picture of the legal landscape in the United States is more difficult to present due to its federal system. Neither the Restatement (Second) of Conflicts of Law nor the Restatement (Third) of Foreign Relations Law of theAmerican Law Institute deals with the subject. In a modern case33 decided in 1990,
Wells v. Entre Computer Centers Inc.,34 the Court of Appeals for the Fourth Circuit
denied the availability of damages for breach of a choice-of-court agreement forthe simple reason that no supporting authority had been cited. More recently, thecourts have started to award, or suggest the possibility of awarding, damages in thefirst category of cases. Thus, in Omron Healthcare Inc. v. MacLaren Exports Ltd,35
an action was brought in Illinois in breach of an English choice-of-court agreement. The Court of Appeals for the Seventh Circuit, affirming the decision of theDistrict Court to decline jurisdiction, suggested obiter that damages for breach of achoice-of-court agreement might have been awarded if the defendant had opted toclaim them. In Laboratory Corp. of America Inc. v. Upstate Testing Laboratory
29[2007] EWHC 54 (Comm) at para. 9. The case concerned a breach of an arbitration agreement but the language of the court’s reasoning was broad enough to cover a
choice-of-court agreement.
30[2007] EWCA Civ 882 at para. 37. The case was concerned with the breach of anexpert determination clause.
31[2007] EWHC 1742 (Comm).
32
Those proceedings had either been summarily dismissed on the merits or dismissed on the grounds of forum non conveniens.
33
In an archaic case, Nute v. Hamilton Mutual Insurance Co. (72 Mass. 174 (1856)),
the Supreme Judicial Court of Massachusetts gave a ruling which could be interpreted as
accepting that damages were recoverable for breach of a choice-of-court agreement. But its
value as a precedent for interstate or international cases is doubtful since in this case anaction was brought before the court in the county of Essex in breach of a choice-of-court
agreement choosing the court in the county of Suffolk, both of which were situated in thestate of Massachusetts.
34
915 F.2d 1566 (4th Cir. 1990).
35
28 F.3d 600, 604 (7th Cir. 1994) para. 6.

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Damages for Breach of a Choice-of-court Agreement
Inc.,36 a District Court in Illinois held, citing the Omron Healthcare decision, thatthe defendant to the New York action, which had earlier been dismissed by the
New York court, was entitled to recover damages for breach of a choice-of-court
agreement in favour of the Illinois court. It made no reasoned analysis, and the law
report does not mention the amount of damages awarded. In Allendale Mutual
Insurance Co. v. Excess Insurance Co. Ltd., 37 the District Court of New Yorkawarded damages for breach of a choice-of-court agreement in favour of ‘a courtof competent jurisdiction within the United States of America.’ It did so in respectof an action brought in England over which the English court had declined jurisdiction for breach of that agreement. The sum awarded was equivalent to the costs
the defendants of the English action had incurred less the amount which had been
awarded to them by the English court. The New York court declared that New
York law allowed the recovery of damages for breach of a choice-of-court agreement by citing the Laboratory Corp. case although it did not explain why the lattercase could be treated as an authority on New York law. In Indosuez International
Finance B.V. v. National Reserve Bank,38 an action was brought in Russia in breachof a choice-of-court agreement, though no further detail is clear from the report.
The Appellate Division of the Supreme Court of New York39 held that damages
might be awarded for breach of a choice-of-court agreement by citing the Allendalecase and the Laboratory Corp. case. There are other more recent decisions supporting the availability of the remedy.40
A recognition of the remedy can also be found in the recent case law ofAustralia.41 This overview shows that the courts in the common law countries havestarted to embrace the remedy of damages for breach of a choice-of-court agreement. None of those courts, however, have undertaken a sufficiently comprehensive analysis to match the complexity of issues raised by this remedy and thereports of their decisions often leave the relevant facts unclear.
Thus far, there appears to be no case in which a damages claim was madefor breach of a choice-of-court agreement in the intra-EU context42 to which the
36

967 F.Supp. 295 (ND Ill 1997).
992 F.Supp. 278, 286 (SD NY 1998).
38
758 N.Y.S.2d 308 (N.Y. App. Div. 2003).
39
It is an intermediate appellate court in the State of New York, where the highest
court is the Court of Appeals.
40
E.g. Masiongale Elec.-Mech., Inc. v. Constr. One, Inc., 102 Ohio St.3d 1 (Ohio
2004); Ball v. Versar Inc. 454 F.Supp.2d 783, 809 obiter (S.D. Ind., 2006).
41
See e.g. Incitec Ltd v. Alkimos Shipping Corp. [2004] FCA 698; CommonwealthBank of Australia v. White (No. 2 of 2004) [2004] VSC 268. The facts and decisions of
those cases will be outlined in Section VII below.
42
To the same effect, see Through Transport Mutual Insurance Assn (Eurasia) Ltd v.
New India Assurance Co Ltd [2003] EWHC 3158 (Moore-Bick J.) para. 34; BRIGGS A.,‘Antisuit Injunctions and Utopian Ideals’, in: L.Q.R. 2004, pp. 529, 532; BLOBEL F./SPATH
P., ‘The Tale of Multilateral Trust and the European Law of Civil Procedure’, in: E.L. Rev.
2005/ p. 528 as well as GROSS P., ‘Antisuit injunctions and arbitration’ in: L.M.C.L.Q. 2005,
pp. 10-27 which, in discussing the breach of arbitration agreement, expresses the same view.
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Koji Takahashi
Brussels I Regulation43 is applicable. But there is a good possibility that this ingenious remedy will be tested in that context44 since it may be thought that it is the
only effective relief left available after the decisions of the European Court of Justice (ECJ) in the cases of Gasser45 and Turner.46 As a result of the Gasser ruling,where actions are pending between the same parties on the same cause of action in
two Member States, the court seised second must stay its proceedings until the
court first seised has declined jurisdiction in accordance with the rules of theBrussels I Regulation which give precedence to the proceedings of the court firstseised47 even if it considers itself to have been chosen by an exclusive choice-ofcourt agreement. Much less can it issue an antisuit injunction to restrain the proceedings of the court first seised even if it considers them to be vexatious or
oppressive, as the result of the Turner decision.48 The EU law in this field has been
honed by the ECJ as a tool for promoting mutual trust between the courts of different Member States. But remedial responses to wrongs between private parties
are in general49 beyond the reach of the ECJ. It follows that if a claim for damages
for breach of a choice-of-court agreement is framed in contract or tort, the ECJ’s
power to tame the remedy may be limited.

43

Council Regulation (EC) No. 44/2001 on Jurisdiction and the Recognition and
Enforcement of Judgments in Civil and Commercial Matters [2001] O.J. L 12/1.
44
HESS B./PFEIFFER T./SCHLOSSER P., ‘Report on the Application of Regulation
Brussels I in the Member States’, (Study JLS/C4/2005/03, September 2007) [462] alludes tothis possibility.
45
Erich Gasser GmbH v. Misat Srl (Case C-116/02) [2003] E.C.R. I-14693. Thiscase was decided under the Brussels Convention, the predecessor of the Brussels I Regulation. But its ruling should be equally applicable under the Regulation.
46
Turner v. Grovit (Case C-159/02) [2004] E.C.R. I-3565. This case, too, was decided under the Brussels Convention. Its ruling should be equally applicable under theBrussels I Regulation.
47
Article 27 (formerly Article 21 of the Brussels Convention).
48
In that case, the ECJ held that the courts of a Contracting State of the Brussels
Convention had no power to issue an antisuit injunction to restrain proceedings in other
Contracting States.
49
In the field of substantive private law, it is only specific areas, such as those relating to consumer protection and products liability, that the EC legislator has adopted
measures over which the ECJ has jurisdiction. The width of the legislative power depends
on the interpretation of the word ‘measure’ in Article 95 (1) of the Treaty Establishing theEuropean Community: OJ C/2006/321E/1.

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Damages for Breach of a Choice-of-court AgreementV.

Is the Question Procedural or Substantive?

A choice-of-court agreement possesses procedural character. That is manifested in,for example, its exclusion from the scope of the Rome I Regulation.50 When consulted on a draft text of that Regulation, the European Economic and Social Committee observed51 that the exclusion of a choice-of-court agreement was based on
the same reasoning as that of procedure issues.52 This position is inherited from its
predecessor, the Rome Convention,53 which also excluded a choice-of-court agreement54 on the same reasoning.55
It might be thought that all issues concerning a choice-of-court agreement
have procedural character and are accordingly subject to the lex fori.56 Caution,
however, is due against excessive reliance on the lex fori since the foundation of
the modern conflict of laws is the idea of equal treatment of foreign and domestic
legal systems. Admittedly, the issues forming part of the administration of justicewhich impinge directly on the resources of the State should be characterised asprocedural and accordingly be determined by the lex fori. But other issues should
be characterised as substantive and accordingly be submitted to the normal choiceof-law process.
Thus, for example, the issue whether jurisdiction is conferred or excluded
by a valid choice-of-court agreement should be characterised as procedural since it
impinges directly on the judicial resources. On the other hand, the valid formationof a choice-of-court agreement, such as the effect of fraud or duress on validity,
does not have to be characterised as such. Rather, just like the validity of an ordinary commercial contract, it should be characterised as substantive. Similarly,
there is room to characterise as substantive the issues of whether, in what circumstances, and to what extent damages are recoverable for breach of a choice-of-court
agreement. If so characterised, the answer to those issues will depend on the50

Article 1(2)(e) of the Regulation No. 593/2008 of the European Parliament and of
the Council of 17 June 2008 on the law applicable to contractual obligations: OJ
L/2008/177/6.
51
Para. 3.1.4 of the Opinion of the European Economic and Social Committee on the
Proposal for a Regulation of the European Parliament and of the Council on the law applicable to contractual obligations (Rome I): COM(2005) 650 final – 2005/0261 (COD).
52
Article 1(3).
53
The Convention of 19 June 1980 on the Law Applicable to Contractual Obligations: OJ L/1980/266/1.
54
Art. 1(2)(d).
55
See the comment on Article 1(2)(d) of GIULIANO M./LAGARDE P., ‘Report on theConvention on the law applicable to contractual obligations’ in: OJ C/1980/282.
56
As once held by the Tokyo District Court in its judgment on 17 October 1967 (reported in 18-9/10 Kaminshu 100). It must be noted, though, that as is the case with otherdecisions of the lower courts, this pronouncement is not a definitive representation of Japanese law since it is not binding on other courts in future cases.

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governing law of the damages claim, which will in turn depend on the legal basis,such as contract and tort, in which the claim is framed.
As regards the governing law, choice-of-law rules differ from country tocountry but there are some similarities between many of them. Thus, if a damages
claim for breach of a choice-of-court agreement is framed in contract, 57 thegoverning law may be the law chosen by the party as the law governing thatagreement, and where, as may often be the case, there is no effective choice, it may
be the law applicable to the substantive contract to which the choice-of-court
agreement is attached or it may be the law of the forum chosen by that agreement.58
If the claim is framed in tort, the governing law may be: the law of the forum firstseised in the capacity of the law of the place where the tortious act has been committed; or it may be the law of the forum chosen by the agreement in the capacityof the law of the place where the resulting damages have occurred;59 or in the capacity of the law of the place with which the tort is most closely connected.60

VI. The Legal Basis of the Claim
Whenever the defendant to an action considers that the court hearing the action has
no jurisdiction, he may wish to claim damages to recover whatever the loss sustained in defending the action or incurred from the ensuing decisions. However, his
claim has no chance of success unless it is supported by a cause of action.
In this regard, a breach of a choice-of-court agreement may be considered to
be a breach of contract or a tort, and a claim for damages for the breach may accordingly be framed in contract or tort. Alternatively, the same financial purpose may
be pursued by making a restitutionary claim. Whether such claims will succeed
will depend on the governing law. This article will focus on the contractual basis of57

The choice-of-law rules for substantive contracts may not be applicable. See e.g.
Article 1(2)(e) of the Rome I Regulation.
58
As apparently suggested in YEO N./TAN D., ‘Damages for Breach of Exclusive
Jurisdiction Clauses’, in: WORTHINGTON S. (ed.) Commercial Law and Commercial Practice, Oxford and Portland Oregon 2003, Ch14, pp. 403, 404. Articles 5(1) and 6(a) of the2005 Hague Convention on Choice of Court Agreements refer the validity of a choice-ofcourt agreement to the law specified by the choice-of-law rules of the forum chosen by theagreement: See HARTLEY T./DOGAUCHI M., ‘Explanatory Report on the 2005 Hague
Convention on Choice of Court Agreements’, para. 125.
59
See e.g. Article 4(1) of the Rome II Regulation (Regulation No. 864/2007 of theEuropean Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations: OJ L/2007/199/40). It must, however, be noted that whether a claim
framed in tort for breach of a choice-of-court agreement falls within the purview of theRome II Regulation is far from certain.
60
See e.g. Article 4(3) of the Rome II Regulation.

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Damages for Breach of a Choice-of-court Agreement
the claim61 since the discussions in the common law jurisdictions generally presuppose that the breach of a choice-of-court agreement is a contractual question.62
Even if it is accepted that a choice-of-court agreement is a contract, it may
be seen to be a contract of special character. Thus in Japan, agreements on procedural steps, such as a choice-of-court agreement, are called procedural contracts(soshô keiyaku) which include arbitration agreements, choice-of-law agreements,
antisuit agreements, agreements to discontinue an action, agreements to desist fromexecuting a judgment, agreements to abstain from disputing particular facts, andagreements to refrain from adducing particular evidence. Where there is a breachof, for example, an antisuit agreement or an agreement to discontinue an action, it
is generally thought that the court may either bring the action to an end or specifically enforce the agreement. But no discussion is to be found over the possibility ofawarding damages for breach of any of those procedural contracts. That is presumably due to the dearth of practice, at any rate to date, of seeking such a remedy.
In theory, the possibility of a damages award may not be foreclosed.
A view which acknowledges the distinctive character of a choice-of-court
agreement is to be found also in the scholarship of common law countries. Thus, it
has been suggested that a choice-of-court agreement is not an ordinary contract
creating an independently enforceable obligation and that the only way for the
courts to give effect to it is to uphold or decline jurisdiction or to restrain proceedings in other countries.63 The mainstream of the common law thinking, however, makes no dogmatic distinction in character between a choice-of-court agree-

61

However, a brief note on other possible legal bases is in order. The tort characterisation has not been paid much attention in the common law discourse. It may play a more
prominent role in Japanese law since damages claims are usually characterised as such when
they are granted generally in respect of procedural steps. Thus, the Japanese Supreme Court
acknowledged that the institution of an action could be regarded as a tortious act where it
was plainly unreasonable in view of the purpose of the judicial system. It calls for analysis,though, how this test can be applied to the case of a breach of a choice-of-court agreement.
There is also the possibility of a restitutionary claim to recover the benefit which the plaintiff unjustly obtained at the expense of the defendant by bringing an action in breach of achoice-of-court agreement. But this possibility is hardly examined in the common law discourse.
62
E.g. Union Discount Co v. Zoller [2002] 1 W.L.R. 1517 para. 19; Donohue v.
Armco Inc [2002] 1 All ER 749 (HL) at paras. 36, 48. Also see National Westminster Bank
Plc v. Rabobank Nederland (No. 3) [2007] EWHC 1742 (Comm) para. 20 (The costs
incurred in restraining proceedings brought in breach of an antisuit agreement were held
recoverable as damages for breach of a contract). Among the commentaries, see e.g. TAN
D./YEO N., ‘Breaking Promises to Litigate in a Particular Forum: Are Damages an Appropriate Remedy?’, in: L.M.C.L.Q. 2003, p. 435; cf. THAM C.H., ‘Damages for breach ofEnglish jurisdiction clauses: more than meets the eye’, in: L.M.C.L.Q. 2004, p. 46, argues
that contractual damages are difficult to justify and that a tortious claim may arguably beavailable as an alternative.
63
E.g. HO L.C., ‘Antisuit injunctions in cross-border insolvency: A restatement’, in:
I.C.L.Q. 2003, pp. 697, 707-708.

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ment and substantive contracts and instead stresses their shared attribute, namelythat both may be the product of a hard-fought negotiation.
Traditionally, however, the common law countries have been treating abreach of a choice-of-court agreement differently from a breach of an ordinary
contract. Thus, the primary remedy available as of right for breach of an ordinary
contract is damages whereas specific performance is only granted at the court’s
discretion where damages do not provide adequate relief. On the other hand, theusual remedy for breach of a choice-of-court agreement has not been the award ofdamages but a stay of proceedings or, where the action was brought abroad, theissuing of antisuit injunction.64 An English court has attributed this difference not
to any dogmatic characterisation of a choice-of-court agreement but to more practical reasons, namely, the difficulty of quantifying damages for its breach and thenegative impact that damages award may have on international comity.65 It should,
however, be pointed out that the difficulty of quantification per se is not a goodreason to deny the recoverability of damages.66 Furthermore, as will be shown in
Sections VIII and X below, the difficulty of quantification and the extent of implications for comity differ between different types of cases in which the claim is
made.
In the types of cases where quantification and comity do not pose difficulties, the common law jurists would not be deterred from submitting the breach of achoice-of-court agreement to the normal contractual analysis. That would result in
the award of damages if the governing law is a common law legal system because
damages are recoverable as of right as the primary remedy and because liability forbreach of contract is strict,67 requiring neither negligence nor intent on the part ofthe defaulting party. The liability may, therefore, come as a surprise for the plaintiff of the action complained of if he has acted in genuine belief that the choice-ofcourt agreement is null and void or non-exclusive.68 The chain of causation would
not be severed69 even in the second category of cases, i.e. where the court firstseised has decided to hear the case on the merits, since that response of the court isnone other than what the plaintiff petitioned for and accordingly is foreseeable tohim.
64

See note 23 for authorities.
OT Africa Line Ltd v. Magic Sportswear Corp [2005] 1 C.L.C. 923 para. 33 (CA).
66
The Japanese Code of Civil Procedure provides in Article 248 that where the proofof the amount of damage is extremely difficult due to the nature of the damage, the court
may make a reasonable estimate on the basis of the arguments made and evidence adducedin the hearing.
67
See e.g. SMITH S., Contract Theory, Oxford 2004, p. 376, which considers justifications for strict liability.
68
And there can be good reasons to believe so since the same choice-of-court agreement may have different effects depending on the governing law, as explained in Section II
above.
69
As a general rule, the chain of causation is severed if an unforeseeable act of athird party intervenes: Stansbie v. Troman [1948] 2 KB 48.
65

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Damages for Breach of a Choice-of-court Agreement
In the civil law system, on the other hand, liability for breach of contract istraditionally fault-based. 70 Thus, under Japanese law, both jurisprudence andscholarship require negligence or intent as an essential ingredient for liability forbreach of contract.71 Accordingly, if a choice-of-court agreement were to be treatedunder the normal contractual principles, liability for its breach would not be established unless negligence or intent was proved on the part of the plaintiff bringing
the action complained of. It follows that if the plaintiff was in genuine belief thatthe agreement was null and void and if he is found to be faultless in so believing,he may be exonerated. It would be possible to find negligence or intent in manycases belonging to the first category since the court first seised in that category ofcases also acknowledges that there is a breach. Making such a finding, however,would be more difficult in some of the cases belonging to the second category
where the court first seised does not acknowledge that there is a breach, though it
might still be legitimate to hold that there was an intentional breach in such cases
as where the plaintiff has flouted a plainly valid choice-of-court agreement bybringing an action before a remote court which would, to his knowledge, exercise
an exorbitant jurisdiction and deny effect to any foreign choice-of-court agreement.

VI. Availability of the Remedy in the Forum First
SeisedFor the defendant of an action which has been brought in breach of a choice-ofcourt agreement, it would be more convenient if he can obtain damages for thebreach in the court before which the action has been brought (i.e. ‘the court firstseised’ according to the terminology of this article) than going to another forum toclaim them.
Whether that court has jurisdiction to hear such a damages claim depends
on its jurisdictional rules. Thus, it may have jurisdiction in the cases where, forexample, it is the court for the place where the plaintiff (i.e. the respondent to thedamages claim) is domiciled or resident. It may also have jurisdiction where theplaintiff is deemed to have submitted to its jurisdiction by entering appearance,
which he may well do since it is the court he chose to bring his action before in thefirst place.
Where the court has jurisdiction, the availability of the remedy of damages
and the extent of recovery will depend on the applicable law. If the court treats thebreach of a choice-of-court agreement as a procedural matter, it will apply theprocedural rules of the forum as the lex fori. In general, there can be procedural70

For a survey, see e.g. VON BAR, C./DROBNIG U., The Interaction of Contract Law
and Tort and Property Law in Europe: a Comparative Study, München 2004, paras. 83-92.
71
The defendant is considered to have the burden of proving the lack of intent andnegligence.

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rules, outside those pertaining to a costs order, which may be invoked to award
damages in respect of losses caused by certain procedural steps.72 It is therefore
possible, at least in theory, to conceive of procedural rules for awarding damages
for breach of a choice-of-court agreement. In practice, though, it is unlikely for any
country to presently have such procedural rules since the concept of damages forbreach of a choice-of-court agreement has not yet received wide recognition. If, on
the other hand, the court treats the breach of a choice-of-court agreement as a
substantive matter, the success or failure of a damages claim for the breach will
depend on its governing law.
Other factors relevant to the availability of damages in the forum first seised
will be examined below by reference to the two categories of cases described in
Section III above.

A.

The First Category of Cases

In the first category of cases, i.e. where the court first seised dismisses or stays its
proceedings, the court may issue a costs order allowing the defendant to recover allor part of his costs from the plaintiff.73 If the costs order has not fully compensatedthe defendant for his costs, whether he can claim the remainder as damages forbreach of a choice-of-court agreement in the same forum is the question here.
In many jurisdictions, the damages claim will be barred by the rules of res
judicata. For example, in the English case of A v. B (No. 2),74 Colman J. took the72

Thus, in Japan, where a judgment is set aside or modified after it has been provisionally executed, there is a procedural rule rendering the plaintiff, i.e. the party who hasapplied for the provisional execution, liable to pay damages for the loss caused by the
execution: Article 260(2) of Minji Soshô Hô [the Code of Civil Procedure].
73
In so doing, the court may take into account the breach if to do so is permitted
under its costs rules. In England, costs are in general borne by the losing party. But in practice, it is only 50 to 60 per cent of the total costs which are usually awarded under themeasure known as the standard basis: BIRKS P. (ed.) English Private Law, vol. 2, Oxford
2000, para. 19.321 (by ANDREWS N.). Under that measure, the recoverable costs must be
reasonably incurred and proportionate to the matter in question, with any doubt about thereasonableness being resolved in favour of the losing party (Civil Procedure Rules, Rule44.4(2)). Depending on the losing party’s procedural behaviour, however, the court may use
the measure known as the indemnity basis, under which there is no requirement of proportionality and any doubt about reasonableness is resolved in favour of the winning party:
Rule 44.4(3) of the Civil Procedure Rules. In A v. B (No. 2) [2007] EWHC 54 (Comm), an
action had been brought in England in breach of a Swiss arbitration agreement, and it washeld that in such a case, the indemnity basis should normally be used to assess the recoverable costs on the ground that the conduct of deriving an unjustifiable procedural advantage through deliberately ignoring such an agreement constituted the misuse of the judicial
facilities. The language of the court’s reasoning was wide enough to cover the case of achoice-of-court agreement. A similar suggestion has been made with respect to costs for
applying for an antisuit injunction to restrain foreign proceedings brought in breach of achoice-of-court agreement: see YEO N./TAN D. (note 58), pp. 403, 413-414.
74[2007] EWHC 54 (Comm) at para. 9.

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Damages for Breach of a Choice-of-court Agreement
view that in England, separate proceedings for damages could not be instituted
because, when there was a breach of a choice-of-court agreement, the cause ofaction for the relief of staying proceedings and the cause of action for the relief ofdamages were normally the same.75 In Union Discount Co v. Zoller,76 the English
court observed that the defendant to the New York action, after having disputed thejurisdiction of the New York court by relying on an English choice-of-court
agreement, would not be able to claim damages for breach of the agreement in
New York and therefore would have to come to England to do so.

B.

The Second Category of Cases

It will be recalled that in the second category of cases, the court seised of an action
alleged by the defendant to have been brought in breach of a choice-of-court
agreement nevertheless decides to hear the case on the merits. In most of thosecases, the court reaches that decision by finding that there is in fact no breach of anagreement and, therefore, a damages claim for the breach will fail.
Such a claim may, however, be successful in the cases where the court findsthat there is a breach of a choice-of-court agreement but nevertheless decides tohear the case by refusing to dismiss or stay its proceedings under whatever discretion it has. Examples of those cases have been mentioned in Section III above. In
such cases, as between the parties to a choice-of-court agreement, the court may
award the defendant damages for breach of the agreement in respect of the costs
incurred over and above the sum already awarded to him by its costs order. It is
doubtful, however, that the court will go so far as to allow him to claw back any
sum which it has ordered him to pay by its own judgment on the merits77 since
doing so would effectively negate its own decision to hear the case in the firstplace. To reject such a claw-back claim, the court may refuse to see the sum it hasordered the defendant to pay as a loss, or find it too remote from the breach, orcome up with other theoretical bases available under the applicable law.
75
It is sometimes said that in England, costs incurred in defending an action, beyond
the sum awarded by a costs order, are not recoverable as damages under the principle
established in Quartz Hill Consolidated Gold Mining Co v. Eyre (1883) 11 QBD 674 (CA).
YEO N./TAN D. (note 58), p. 414, further suggests that it should be immaterial whether or
not the breach of a choice-of-court agreement has been asserted in the hearing on costs
under the principle of Henderson v. Henderson ([1843] 2 Hare 100), under which a party isestopped from raising issues which could and should have been litigated in an earlier action.
Upon a close reading of Quartz Hill, however, the case was only concerned with what the
court called the ‘extra costs,’ i.e. the costs unnecessarily incurred by the successful party indefending the case, and their recovery was denied simply because they could not be properly
considered to have been caused by the unjust litigation.
76[2002] 1 W.L.R. 1517 para. 28.
77
YEO N./TAN D. (note 58), pp. 429-430, however, seem to suggest that suchrecovery should be allowed. They note that the costs, on the other hand, will not berecoverable in England under the Quartz Hill principle (see supra, note 75).

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Koji Takahashi
A couple of Australian cases illustrate the point on costs. In Incitec Ltd v.
Alkimos Shipping Corp,78 the Federal Court of Australia refused to stay its proceedings which had been brought in breach of an English choice-of-court agreement. It did so in order to avoid inconsistent decisions since the action also
involved parties who were not bound by the agreement. The court alluded to thebreach of a choice-of-court agreement in holding that it would hear the parties on
costs, implying that the breach of a choice-of-court agreement would be taken into
account in the application of the normal costs rules. By contrast, another Australiancase, Commonwealth Bank of Australia v. White (No. 2 of 2004) 79 featured adamages claim to recover the costs over and above those recoverable under thenormal costs rules. This case involved third party proceedings and the third party
sought leave to file a counterclaim against the defendant in order to recover thecosts as damages for breach of the English choice-of-court agreement which
existed between them. The Supreme Court of Victoria granted leave, holding that it
was arguable that if the third party succeeded in their defence on the merits,80 theymight have a claim for damages for breach of the choice-of-court agreement. The
court took this view notwithstanding that it had earlier refused to stay the third
party proceedings.

VIII. Availability of the Remedy in Another Forum
Since, as seen above, the damages claim has a limited chance of success in theforum first seised, it will usually be brought in another forum. Whether otherforums have jurisdiction to hear the claim depends on the jurisdictional rules ofeach forum. Thus, for example, the forum chosen by the choice-of-court agreement
may have jurisdiction by virtue of being so chosen,81 or in the capacity of the forum
where the contract (i.e. the choice-of-court agreement) should have been performed
if the claim is framed in contract, or in the capacity of the forum where harm isdone to the interests of defending the action there if the claim is framed in tort.
Also, the forum in which the defendant to the damages claim (i.e. the plaintiff ofthe action brought in breach of a choice-of-court agreement) is domiciled or resident may have jurisdiction.
Other questions which may arise when the damages claim is made in thoseforums include whether the jurisdictional battle should be arrested by the binding
force of res judicata or under more general principles and whether awarding
78[2004] FCA 698 para. 67.
[2004] VSC 268.
80
The court reasoned as if the third party’s success in his defence on the merits werea prerequisite to his entitlement to damages. But that should be immaterial.
81
To allow this logic, the choice-of-court agreement must cover within its scope adamages claim for its breach, an interpretation which is not without difficulty.
79

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Damages for Breach of a Choice-of-court Agreement
damages would not offend international comity towards the court first seised.
Those questions will be examined in turn below.

A.

Finality of the Settlement of a Jurisdictional Battle

1.

Pleas of res judicata

Generally, the finality of the settlement of a dispute is achieved in the international
arena only to the extent the decision is recognised as having the binding force ofres judicata in other countries. Since a claim for damages for breach of a choiceof-court agreement could prolong the jurisdictional battle, it would be apposite toconsider whether the decisions of the court first seised are recognised as having theres judicata force of precluding the damages claim in the other forum. This question can be rephrased in the context of specific types of cases. Thus, in the firstcategory of cases, the question is whether the costs order which has awarded thedefendant some of his costs will acquire a binding force of res judicata precluding
his claim for damages to recover the remainder of his costs.82 In the second category of cases, the questions are, apart from the same question as that for the firstcategory, whether the costs order which has compelled the defendant to pay someof the plaintiff’s costs will have the res judicata effect of precluding his claim fordamages to claw back the sum he has been compelled to pay, and whether the
judgment on the merits rendered against the defendant acquires the binding forceof res judicata precluding his claim for damages to claw back the sum he has been
compelled to pay. Where the defendant has claimed damages in the forum firstseised rather than being content with a normal costs order, a further question arises
whether the decision in the first forum may be presented as res judicata to preclude
the defendant from making another damages claim to recover the remainder inanother forum.
If the costs order or the judgment on the merits, as the case may be, satisfies
the prerequisites for recognition,83 it will be recognised as res judicata and preclude
the damages claim.84 Where the court first seised and the court hearing the damages
claim are both situated in the EU Member States or in the Contracting States to the82
This question did not arise for the English Court of Appeal in Union Discount Co
v. Zoller ([2002] 1 W.L.R. 1517) since, as noted by the English court (para. 26), the New
York court had made no decision on the costs.
83
Such as the non-infringement of public policy and the sufficient service of the
document instituting proceedings: see e.g. Article 34 of the Brussels I Regulation and
Article 27 of the Lugano Convention.
84
BRIGGS A. (note 27), para. 8.22, however, suggests that an application for costs is
not to be seen as the prosecution of a cause of action in English law, with the result that aclaim for damages in respect of the unrecovered costs is not barred under section 34 of the
Civil Jurisdiction and Judgments Act 1982 which provides that a party who has obtained afavourable foreign judgment recognisable in England may not bring proceedings in Englandon the same cause of action.

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Lugano Convention, the Brussels I Regulation and the Lugano Convention apply
respectively. Under those regimes, as a general rule, no jurisdictional review ispermitted85 and the decisions of the first court are to that extent more likely to berecognised.86 Under most other legal systems,87 a jurisdictional review is a prerequisite for recognition. That requirement is unlikely to be satisfied in the present context, with the result that the damages claims are not precluded. That is because theclaimant of the damages claim would usually choose to make the claim before acourt which would affirm the breach of the choice-of-court agreement.
In many legal systems, a costs order will be subject to the same rules forrecognition as a judgment on the merits.88 In Japan, there is a case89 in which theSupreme Court considered the enforcement of a costs order which a Hong Kong
court had issued after rendering a judgment on the merits. It was held that whether
the foreign court issuing a costs order had jurisdiction to do so from the Japanese
viewpoint depended on whether it would have had jurisdiction over the merits ofthe case if the Japanese jurisdictional rules had been applicable. This ruling was
based on the reasoning that the costs order was an offshoot of a judgment on the
merits. From this ruling, it would follow that in the cases with which the present
discussion is concerned, the costs order issued by the court first seised will not
likely be recognised since the claimant of damages would usually choose to makethe claim before a court which would affirm the breach of the choice-of-court
agreement. The damages claim would therefore not likely be precluded.
Where the defendant to the action brought in breach of a choice-of-court
agreement has made a damages claim in the forum first seised, the decision on thatclaim will acquire a binding force of res judicata precluding another damages
claim to recover the remainder in another forum, provided that the decision is entitled to recognition in the latter forum. Among the prerequisites for recognition, thejurisdictional requirement will likely be satisfied since the defendant has submitted
to the jurisdiction of the first court by making the damages claim there.

85
See Art 35(3) of the Brussels I Regulation, Art 28(4) of the Lugano Convention.
Incidentally, the 2005 Hague Convention on Choice of Court Agreements in its Chapter III
provides for the recognition of a judgment given by a court chosen by a choice-of-court
agreement, but it is silent on the recognition of a judgment by a non-chosen court.
86
Accord: JOSEPH D., Jurisdiction and Arbitration Agreements and their Enforcement, London 2006, p. 406.
87
E.g. Article 118(1) of Minji Soshô Hô [the Japanese Code of Civil Procedure]. In
England, s. 32 of the Civil Jurisdiction and Judgments Act 1982 specifically mentions aforeign judgment given in breach of a choice-of-court agreement and provides that such a
judgment will not be recognised or enforced in England, except where the Brussels I Regulation applies.
88
E.g. Article 32 of the Brussels I Regulation provides that the word ‘judgment’embraces the determination of costs by an officer of the court. It would a fortiori cover thedetermination of costs by a court.
89
The judgment of the Supreme Court on 28 April 1998 (Minshû, Vol. 52, No. 3, p.
853; translated into English in: JAIL 1999, p. 155).

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Damages for Breach of a Choice-of-court Agreement
A separate somewhat taxing question arises in the second category of cases
if the damages claim is brought in a third forum, i.e. a forum other than the forum
first seised or the forum chosen by the choice-of-court agreement. In such asituation, if the judgment on the merits of the court first seised is entitled torecognition in the forum chosen by the agreement, should the claim be dismissed
for that reason?90 A negative answer would follow if it is thought that the court
hearing the claim should not let itself be confused by others’ viewpoints but should
be guided solely by its own law. Then, the court may allow the claimant (i.e. thedefendant in the forum first seised) to claw back the sum he has been compelled to
pay by the court first seised. However, the plaintiff would have no chance to relitigate the case in the chosen forum since his action would be, ex hypothesi, dismissed by the binding force of res judicata. If such a consequence is considered to
be unfair for the plaintiff, an affirmative answer should be supported.

2.

General Principles of Procedure Law

As we have seen just above, the decisions made in the forum first seised often do
not acquire the binding force of res judicata precluding the damages claim made inanother forum. As a matter of policy, however, a claim for damages for breach of achoice-of-court agreement should not be encouraged since it gives rise to the question where the action should have been brought after the court first seised has addressed a similar question of equal complexity, i.e. whether it has jurisdiction. It
may, therefore, be thought that such a claim should be precluded by the generalprinciples of procedure law, such as those of good faith and abuse of process.91
Thus, in England, the institution of an action which would bring theadministration of justice into disrepute among right-thinking people is regarded as
an abuse of process. 92 This concept was invoked in an international context inHouse of Spring Gardens Ltd v. Waite.93 In that case, two of the three defendants
who had lost in an Irish action brought a fresh action there to set aside the judgment on the ground of fraud, but the Irish court dismissed it. When the original
Irish judgment was sought to be enforced in England, the English court held that it
would be an abuse of process for the third defendant, who did not join the second
Irish action, to try to block the execution by alleging fraud since he had been wellaware of that action.

90

An analogous question, to which an analogous analysis can be applied, is whether
the claim should be dismissed if the court specified by a choice-of-court agreement wouldfind the agreement invalid or non-exclusive.
91
For an examination of the use of such general concepts in the Japanese civil procedure, see TANIGUCHI Y., ‘Good Faith and Abuse of Procedural Rights in Japanese Civil
Procedure’ in: Tul. J. Int'l & Comp. L. 2000, p. 167.
92
Hunter v. Chief Constable of the West Midlands Police [1982] AC 529, 536.
93
[1991] 1 QB 241, 254-5.

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No case is to be found where the court has dismissed a damages claim forbreach of a choice-of-court agreement as an abuse of process. Such general concepts tend to have an ill-defined scope of application. There is a view which considers it to be inappropriate to invoke such a general principle in order to deny or
restrict what is considered to be a fundamental right to claim damages for breach ofa choice-of-court agreement.94 But it is a remedy no more fundamental than thenormal relief of damages for breach of an ordinary contract. There may, therefore,
be appropriate cases where resorting to such general concepts is apt in order tocurb an attempt to jeopardise the finality of settlement of a jurisdictional dispute.

B.

Comity towards the Court First Seised

Even if the decisions of the court first seised do not have the effect of precluding adamages claim in another forum, it may be queried whether allowing such a claim
would not be contrary to international comity towards the court first seised.
Comity is a complex concept; it does not imply an absolute obligation but
requires deference to foreign interests. Due to the opaqueness of the concept, aclear line cannot be drawn to define an acceptable range of conduct. It would not,therefore, be possible to conclude unequivocally whether awarding damages forbreach of a choice-of-court agreement offends international comity towards thecourt first seised.
What is not impossible, though, is to assess the degree of implications forinternational comity. The court seised with a damages claim may take that into
account under whatever discretion it has on the exercise of jurisdiction over theclaim or on the assessment of damages.95 The court may also exclude the application of the foreign law governing the claim if it results in awarding damages in thecircumstances where it has such a negative impact on comity as would be contrary
to the ordre public of the forum.96

94

E.g. YEO N./ TAN D. (note 58), p. 419.
TAN D., ‘Damages for Breach of Forum Selection Clauses, Principled Remedies,
and Control of International Civil Litigation’, in: Tex. Int'l L.J. 2005, pp. 623, at 658, suggests that awarding damages in the reliance measure will go some way towards alleviating
affront to comity since the quantum of damages will in most cases be drastically less andmore easily ascertainable than one assessed in the expectation measure. The reliancemeasure allows recovery of damages which have resulted from the reliance on a contract
which later transpires to be invalid. In the present context, it protects the interest of relianceon a choice-of-court agreement in the belief that it is valid and exclusive.
96
It might, however, be reasonable to think that international comity has no bearing
on ordre public, a concept constituted by the fundamental principles underpinning theoperation of a domestic legal system.
95

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Damages for Breach of a Choice-of-court Agreement
1.

The First Category of Cases

It will be recalled that the damages award in this category of cases would allow therecovery of the costs incurred in disputing the jurisdiction of the court first seisedover and above those already awarded by the costs order of that court. To theextent that the damages award disregards the upper ceiling on the awardable costs
set by the court first seised, there is an implication for international comity. The
degree of implication would be greater if the costs rules of the court first seised
give the court discretion to take into account the circumstances of the case sincethat court would be best placed to evaluate the merit of the costs claim.97 Having
said this, implications for comity will not be significant in this category of cases
since, ex hypothesi, the court first seised and the court hearing the damages claim
are in agreement, unlike in the second category of cases, that the court first seised
should dismiss or stay its proceedings on account of the breach of a choice-of-court
agreement. Furthermore, the upper limit on awardable costs would not be a matter
serious enough to impose a heavy strain on international comity.98
In Union Discount Co v. Zoller, 99 the English Court of Appeal
acknowledged that there might be good policy reasons for each of the different
approaches to costs that different countries have. It further accepted that it would
infringe international comity if an English court were to seek indirectly to apply its
own approach to litigation which had taken place in a foreign country. However
the Court of Appeal concluded, noting that comity is a term of elastic content, thatallowing recovery, as damages for breach of a choice-of-court agreement, of costs
over and above those awarded in the forum first seised would not violate international comity. In so concluding, the Court of Appeal considered the reverse situation, i.e. where an English court had dismissed proceedings because of a foreign
choice-of-court agreement, and the court chosen by the agreement awarded thedefendant the costs over and above those awarded by the English court. It observedthat such a result would not cause concern to England.100
It would not be necessary to alter this observation in the cases where thecourt first seised and the court hearing the damages claim are both in the EU

97

ANDREWS N., English Civil Procedure, Oxford 2003, para. 36.110, suggests that
the English courts should show great restraint before supplementing foreign costs orders forthis reason as well as for the reason that relitigating foreign costs matters can become an
expensive and time-consuming satellite litigation.
98
As indicated by the fact that in the situation where the enforcement is sought of aforeign court order awarding costs to the winning party, some courts which would not award
costs to the winning party themselves displayed no objection to enforcing such a foreign
costs order: e.g. the Japanese Supreme Court judgment on 28 April 1998 (note 89, supra)
concerning a Hong Kong costs order; Somportex v. Philadelphia Chewing Gum v. Brewster,Leeds & Co. and M.S. International (453 F.2d 435 (3rd Cir. 1971)) concerning the enforcement of an English costs order in Pennsylvania.
99[2002] 1 W.L.R. 1517 (the English Court of Appeal).
100[2002] 1 W.L.R. 1517 paras. 21-22.

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Member States. The rationale of the ECJ’s decisions in Gasser101 and Turner102 is
the respect which the courts of each Member State are supposed to accord to thoseof other Member States in the correct application of their common jurisdictionalrules. This rationale would not be undermined if, after the court first seised has
declined jurisdiction and awarded the defendant part of his costs, the court ofanother Member State supplements the recovery of the costs as a damages award,
since the latter is not, by so doing, second-guessing the judgment of the court firstseised on the correct application of their common jurisdictional rules.

2.

The Second Category of Cases

It will be recalled that in the second category of cases, the court first seised decides
to hear the case notwithstanding the allegation of a breach of a choice-of-court
agreement. It follows that if the court of another forum awards damages for thebreach, there would be a greater implication for international comity than in thefirst category of cases.
It does happen frequently, though, that the courts of different countries takedifferent views on the same procedural step taken by a party without giving rise toa significant problem of international comity. Thus in a Japanese case,103 a Panamanian company claimed damages in Japan against a Californian company, contending that the latter’s application in California for a provisional attachment of its
ship at a port in California constituted a tort. The California company maintainedthat it would be tantamount to a breach of international comity if the Japanesecourt were to judge the illegality of the application prior to the Californian
appellate court’s review of the lower court’s decision to grant the application. The
Japanese court did not rule on the point since it declined to hear the case on the
ground, inter alia, of parallel litigation. It is submitted that even if the Japanesecourt had ruled that the application constituted a tort in the circumstances where
the California appellate court had affirmed the decision to grant it, the ruling would
not have had a serious impact on international comity. Such a simple divergence ofviews entails no more than the refusal to recognise or enforce the decision of aforeign court.
By comparison, awarding damages for breach of a choice-of-court agreement would have a more serious implication for international comity if, as in thesecond category of cases, it has the effect of negating the decision of the court firstseised by allowing the sums awarded by that court to be clawed back. A greater
restraint would therefore be warranted when awarding damages in the second category of cases.

101

Erich Gasser GmbH v. Misat Srl (Case C-116/02) [2003] E.C.R. I-14693.
Turner v. Grovit (Case C-159/02) [2004] E.C.R. I-3565.
103Tokyo District Court judgment on 15 February 1984 (Kaminshû vol. 35, issues 14, p. 69).
102

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Damages for Breach of a Choice-of-court Agreement
An informative comparison can be made with the recovery allowed underwhat is known as clawback statutes since they also undo the effect of a foreign
judgment. The 1980 United Kingdom Protection of Trading Interests Act, forexample, provides that a foreign judgment awarding multiple damages is notrecognised104 in the United Kingdom105 and moreover allows the defendant of theforeign action to recover from the plaintiff so much of the judgment as exceeds thecompensatory part by bringing an action in the United Kingdom.106 Since those
provisions are effectively targeted at the judgments of the United States, the U.S.
government protested to the U.K. government, contending that those provisions
violated international comity as well as international law.107
In formulating the general principles of conflict of laws, it would bedesirable to promote international comity by adopting a universalist approach.
Such an approach is manifested in, inter alia, the equal treatment of domestic andforeign laws in the choice-of-law field and the common law principle of forum nonconveniens which mandates a stay of proceedings where there is another forum
clearly more appropriate. Nevertheless, it should at the same time be firmly kept inmind that such an idealistic approach could only be sustained if the court isequipped with means to confront the far-from-ideal reality of the world. Thus, theequal treatment of domestic and foreign laws could not be maintained unless there
is an escape hatch to exclude the applicable foreign law which produces results
contrary to the ordre public of the forum. Similarly, the courts in the common law
countries, while subjecting themselves to the self-denying ordinance of the principle of forum non conveniens, keep in their armoury an antisuit injunction to
restrain a vexatious or oppressive pursuit of foreign proceedings which is encountered from time to time in the merciless world of international litigation. By thesame token, where a breach of a choice-of-court agreement bears the hallmarks ofan unscrupulous behaviour, the court hearing a damages claim for the breachshould not shrink from granting the remedy by citing international comity. Where,
for example, the plaintiff blatantly flouts a plainly valid choice-of-court agreement
by bringing an action before a remote court which would, to his knowledge, exercise an exorbitant jurisdiction and deny effect to any foreign choice-of-court
agreement, the court hearing a damages claim for breach of the agreement should
not let international comity stand in the way of granting the relief sought. In fact,
the modus operandi of the court condoning such an opportunistic behaviour would
not be worthy of being granted comity. The courts should not, therefore, shy awayfrom its responsibility towards the aggrieved party who has such a sufficient contact with its forum as to warrant extending him a helping hand.

104
Clawback statutes are more widely known as blocking statutes because of theirfunction of preventing recognition and enforcement.
105
Article 5.
106
Article 6.
107
See ‘United Kingdom: Protection of Trading Interests Act 1980 and Exchange of
Diplomatic Notes Concerning the Act’, in: I.L.M. 1982, p. 840.

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IX. Comparison with an Antisuit Injunction
Where proceedings are about to be brought or have been brought in violation of achoice-of-court agreement choosing the courts of a common law country, thedefendant may be able to obtain an antisuit injunction from the chosen courts torestrain the plaintiff from instituting or continuing with the proceedings.108 As anestablished remedy for breach of a choice-of-court agreement, an antisuit injunction offers a useful point of comparison with the remedy of damages. The two
aspects on which a particularly informative comparison may be made are implications for international comity and effectiveness as remedy.
The compatibility of an antisuit injunction with international comity is often
doubted especially by the civil law jurists. However, the English courts have tried
to justify the injunction by pointing out that it is not issued against the court but
against the plaintiff of the foreign proceedings. 109 A similar argument may bemade110 to play down any concern about the negative impact on comity which adamages award for breach of a choice-of-court agreement may have, by stressingthat it is only a response to the plaintiff’s conduct rather than a criticism of theforeign court. Awarding damages is indeed not incompatible with admitting thatthe foreign court’s decision is correct under the law which it is supposed to applyin accordance with its own choice-of-law rules.111
It may further be thought that damages are less intrusive than an antisuit injunction112 since they are not in general awarded until after the foreign court has ruled
on its jurisdiction or the merits of the case, whereas an antisuit injunction, if
obeyed by the respondent, does not let the foreign proceedings run their course.
The opposite view, however, could just as easily be formed from the same fact
since, unlike an antisuit injunction, damages undo the effect of the foreign decisions after a lot of time, costs and adrenalin have been spent to obtain them.
Another aspect in respect of which an informative comparison can be madewith an antisuit injunction is the effectiveness as remedy. In OT Africa Line Ltd v.
Magic Sportswear Corp,113 the English Court of Appeal observed that the remedyof damages was not as effective as an antisuit injunction for the reasons of negative
impact on international comity and the difficulty of quantification. Whether those108

Donohue v. Armco Inc [2002] 1 All ER 749 (HL).
See e.g. Castanho v. Brown Root LTD [1981] AC 557, 572.
110
See e.g. AMBROSE C., ‘Can Antisuit injunctions Survive European Community
Law?’, in: I.C.L.Q. 2003, pp. 401, 415; BRIGGS A., ‘Distinctive aspects of the conflict oflaws in common law systems: Autonomy and agreement in the conflicts of laws’, in:Doshisha Law Review 2005, para. 40.
111
Accord: MERRETT L., ‘The Enforcement of Jurisdiction Agreements within theBrussels Regime’, in: I.C.L.Q. 2006, pp. 315, 321.
112
On that basis, awarding damages was considered to be an ‘ideal solution’ in Horn
Linie GmbH & Co. v. Panamericana Formas E Impresos S.A., Ace Seguros S.A. [2006]
EWHC 373, para. 26.
113[2005] EWCA Civ 710.
109

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Damages for Breach of a Choice-of-court Agreement
are valid points is considered elsewhere in this article.114 Also, a point has beenmade115 that since an antisuit injunction bites earlier in time than damages, it may
provide a more effective remedy to cash-strapped parties, especially small businesses and individuals, who have difficulty finding resources to defend theiraction.
On the other hand, the versatility of the remedy of damages shows strength
over the rigidity of an antisuit injunction in certain types of cases belonging to thesecond category. Thus, in a multi-party action involving parties some of whom arebound by a choice-of-court agreement, an antisuit injunction restraining only theproceedings between the parties bound by the agreement would negate the advantages of a multi-party action such as the avoidance of inconsistent decisions andthe efficient administration of justice. On the other hand, the award of damages, if
tailored to target only the costs between the parties bound by the agreement, could
to that extent realise the financial interests embodied in the agreement while at thesame time keeping intact the advantages of a multi-party action. Thus, in Donahue
v. Armco,116 the English court refused to issue an antisuit injunction against a New
York action involving parties some of whom were bound by an English choice-ofcourt agreement. But damages were held to be recoverable for breach of theagreement as between the parties to the agreement. Similarly, where the foreign
court finds a breach of a choice-of-court agreement but nevertheless decides tohear the case, as where the plaintiff has been time-barred from suing in the chosen
forum but the court finds that he had not acted unreasonably in failing to sue within
the time, it may not be appropriate or even possible to issue an antisuit injunction,
not least because the foreign proceedings may not in such circumstances be seen as
vexatious or oppressive. Nevertheless, there is room to award damages for breachof the choice-of-court agreement117 to allow recovery of the unrecovered costs sothat the financial purpose of the agreement is, if only partially, attained.
Damages may have another advantage over an antisuit injunction in respectof enforceability.118 An antisuit injunction, being an in personam order, is not effective unless the respondent obeys it. If the respondent disobeys an injunction and isfound guilty of contempt of court, he may be imprisoned or have his assets sequestrated. Those sanctions, however, do not necessarily bring about the intended effectof the injunction. On the other hand, if the award of damages is not voluntarily
complied with, its enforcement would realise its intended pecuniary effect,
although it must be acknowledged that the enforceability of an award of damages
for breach of a choice-of-court agreement outside the forum where it is rendered isat best uncertain and is probably doubtful.

114
115

See Sections VIII and X.
See BAATZ Y., ‘Who Decides On Jurisdiction Clauses?’, in: L.M.C.L.Q. 2004, pp.

25, 28.
116[2002] 1 All ER 749 (HL).
For a similar view, see PEEL E. (note 24), pp. 209, 211.
118
BRIGGS A. (note 110), para. 36.
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X.

Quantification of Damages

Although the English Court of Appeal in the OT Africa Line case119 cited the difficulty of quantification of damages as one of the reasons for observing that theremedy of damages is not as effective as an antisuit injunction, upon a close
analysis, the difficulty differs depending on the types of cases. Thus, as will beseen below, the items for which damages may be claimed are simpler in the firstcategory of cases than the second category. Also, identifying the point in time atwhich the loss is deemed to have materialised will involve a greater difficulty insome of the cases belonging to the second category than other cases.
In the first category of cases, i.e. where the court first seised finds that theaction has been brought in breach of a choice-of-court agreement and accordingly
dismisses or stays its proceedings, the defendant may claim damages for the breachin respect of the costs incurred in disputing the jurisdiction over and above any
sum already awarded to him by a costs order, if any, of the court first seised.
The recoverable sum may, however, be limited to the costs reasonably
incurred under the applicable remoteness test. For example, if an antisuit injunction
is sought unsuccessfully in a third forum, the cost of making the application may
be found to be unreasonably incurred. The remoteness test will be the one applicable to substantive damages claims and will, therefore, be different from themeasure applicable to the costs rules. Thus, in National Westminster Bank Plc v.
Rabobank Nederland (No. 3), 120 the English court refused to apply the standard
basis, a normal measure for costs order under the English Civil Procedure Rules
which requires the costs to be reasonably incurred and proportionate to the matterin issue, on the ground that it would be wrong to apply the measure for costs orderwhen assessing damages for breach.121 The court noted122 that applying the costs
rules would in effect impose on the defendant to foreign proceedings ex post facto
a set of principles for the conduct of proceedings which, at the time of incurring thecosts, he could not have assumed would have any bearing.
The plaintiff may request the court to deduce from the award of damages
the sum equivalent to the costs which the defendant would have been ordered tobear in the forum chosen by the choice-of-court agreement should the plaintiff
have sued there. However, the court may not accede to the request123 unless theplaintiff proves the amount of the costs by actually bringing an action in the chosen
forum. The reason is that it would not be hard on him to require a relitigation of thecase given that in this category of cases the court first seised has dismissed or
stayed its proceedings.
119[2005] EWCA Civ 710.
[2007] EWHC 1742 (Comm).
121
In this case, an antisuit agreement (i.e. an agreement not to sue) was breached but
the language of the decision was wide enough to cover the breach of a choice-of-court
agreement.
122
At para. 25.
123
BRIGGS A. (note 27), para. 8.27, appears more sympathetic to such an argument.
120

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Damages for Breach of a Choice-of-court Agreement
In the second category of cases, the court first seised decides to hear thecase on the merits notwithstanding that the defendant alleges that the action has
been brought in breach of a choice-of-court agreement. On the merits of the case,too, the court may rule in favour of the plaintiff. The court may also make a costs
order either allowing the defendant to recover all or part of his costs from theplaintiff or allowing the plaintiff to do the same from the defendant. Then, thedefendant may make a claim, as a damages claim for breach of the agreement, torecover the costs left unrecovered as well as to claw back the sums which he has
been compelled to pay to the plaintiff by a costs order or a judgment on the merits.
The items for which damages may be sought are therefore more complicated in thiscategory of cases than in the first category. In this category of cases, no court
appears to have had a chance to ponder specific measures of damages.124 If theplaintiff has managed to prove what costs order and judgment on the merits thecourt chosen by the agreement would render, the court hearing the damages claim
may be open to deduct those sums, so that damages awarded would be the sum
equivalent to the financial difference (1) between the costs order actually renderedby the court first seised and that which would be rendered by the chosen court and(2) between the judgment on the merits actually rendered by the court first seised
and that which would be rendered by the chosen court. In making the proof, theplaintiff will have to identify factors which may lead to different decisions between
those two forums, such as rules of evidence, choice-of-law rules, mandatory rules
and the public policy of the forum.125 If the plaintiff fails to make out the proof tothe satisfaction of the court, he would not get the reduction and consequently may
bring an action in the chosen forum to relitigate the case. If the court hearing thedamages claim is the court chosen by the choice-of-court agreement, the plaintiff
may, instead of trying to prove on a hypothetical basis what decisions that court
would make on the costs and merits, opt for actually bringing an action to obtaindecisions. However, unlike the first category of cases just examined, he could notnecessarily be expected to take that step since, ex hypothesi, he may have alreadyobtained a judgment in his favour in the forum first seised. Proof on a hypotheticalbasis may, therefore, be regarded as sufficient.
Damages can only be quantified when the loss has materialised. If the court
is not satisfied that the loss has sufficiently materialised, it may stay proceedings or
reject the claim as being premature. In the first category of cases, the loss in theform of costs incurred in disputing jurisdiction accrues as the proceedings unfold.
In National Westminster Bank Plc v. Rabobank Nederland (No. 3),126 the English
court held that the costs reasonably incurred up to the time of hearing could berecovered even if at some future point in time, the court seised of the action (aCalifornia court in that case) might make a costs order, observing that there would
124
In Donohue v. Armco ([2002] 1 All ER 749, the House of Lords did not consider
quantification of damages since it only accepted a party’s concession to pay damages forbreach of a choice-of-court agreement.
125
For a similar point, see TAN D./YEO N. (note 62), fn. 17.
126[2007] EWHC 1742 (Comm) at para. 3.

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be no question of double recovery. The court did not clarify the basis of this observation, but it may have been thought that the avoidance of double recovery issimply a matter of proof of facts.
In the second category of cases, if the court first seised has ruled in favourof the plaintiff on the merits, the loss is represented by the sum the defendant isordered to pay by the judgment on the merits as well as the costs he is ordered tobear. At what point in time should it be deemed to have materialised? This is noeasy question. Should it be when a pre-judgment provisional measure has been
issued to constrain his asset, or when a final judgment has been rendered against
him, or when a final judgment has been provisionally executed pending appeals, orwhen a final judgment against him has become conclusive, or when a final andconclusive judgment has been executed or otherwise paid for? The answer depends
in theory on the law governing the damages claim. It is submitted that a point
before the provisional execution of a final judgment would not be reasonable.

XI. Duty to Mitigate Loss
Where a party aggrieved by a wrong fails to minimise the loss or has contributed tothe occurrence of the loss, the recoverable damages may be limited by the duty to
mitigate loss or by a similar principle available under the applicable law.127 Such
principles may be pleaded as a defence to a claim for damages for breach of achoice-of-court agreement in a variety of contexts. As examined below, however,such defence is not likely to succeed.
Firstly, it may be argued that the defendant should have made efforts torestrain the proceedings brought against him in breach of a choice-of-court agreement by applying for an antisuit injunction in another forum so that he could besaved the costs and spared an unfavourable judgment on the merits. This argument
will not be found persuasive128 unless the circumstances are such that the chancesthat an antisuit injunction is actually granted and obeyed by the plaintiff are high.
Secondly, where the court first seised is obliged to ascertain its jurisdiction
ex officio, it may be argued that the defendant should not have spent costs in disputing jurisdiction. This contention would be weak since the likelihood of the court
declining jurisdiction would be higher if the defendant disputes jurisdiction bysubmitting evidence. Thus, in Union Discount Co v. Zoller,129 the English court was
unimpressed by the argument put forward by the defendant (i.e. the plaintiff of the
New York action brought in breach of an English choice-of-court agreement) thatthe plaintiff should not have gone to New York to dispute jurisdiction.
127

E.g. the principle of comparative negligence as under Article 418 of Minpô [theJapanese Civil Code].
128
See also YEO N./TAN D. (note 58), p. 423.
129
[2002] 1 W.L.R. 1517 (CA) para. 33.

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Damages for Breach of a Choice-of-court Agreement
Thirdly, in the second category of cases, after the court first seised has
decided to hear the case on the merits, if the defendant omits to defend the case, it
may be contended that he should have made an effort to obtain a favourable judgment.130 This argument should be rejected since where the defendant alleges thatthe action against him has been brought in breach of a choice-of-court agreement,
it does not make sense to expect him to defend the action.131 If, on the contrary, thedefendant opts to defend, he should not be deemed to have waived his right toclaim damages.132
Fourthly, it may be argued that the damages claim should be made in theforum first seised133 to avoid the loss which would arise from the claim being madeand heard in another forum. This argument should be treated with caution because,
as we have examined in Section VII above, the likelihood of the damages claim
being granted in the forum first seised is often neither predictable nor high andbecause, if it is partially granted, a further recovery may be precluded in other fora
where that decision is recognised as res judicata.

XII. Express Clause on Damages
The whole raft of the relevant issues as set out in the present article makes it difficult to predict whether, in what circumstances, and to what extent the remedy ofdamages will be granted. To overcome this uncertainty, wise drafters may wish toagree in express terms that damages are recoverable for breach of their choice-ofcourt agreement. Such a clause may be attached to their choice-of-court agreement
or may be agreed on as a separate contract. Drafters may possibly go further byidentifying the items of loss for which damages are recoverable or go one more
step further to agree on a specific sum as liquidated damages.
Some commentators have begun proposing model clauses. Thus, it has beensuggested to include in an English choice-of-court agreement a clause promising
payment of ‘all such sums as shall represent the whole of the loss’ caused bybreach.134 A suggestion has also been made to attach to a choice-of-court agreement
choosing the Tokyo District Court a clause reading, ‘In the event that either party
institutes any legal proceedings in any court other than the Tokyo District Court,that party shall assume all of the costs incurred in having such proceedings dis-130
An argument envisaged, though not necessarily supported, in BRIGGS A. (note110), para. 29.
131
Accord: YEO N./TAN D. (note 58), p 425.
132
Accord: BRIGGS A. (note 27), para. 8.26.
133
E.g. MERRETT L. (note 111), fn. 35.
134
BRIGGS A. (note 27), p. 161 with a commentary at para. 5.51.

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missed or stayed, including but not limited to the other party’s attorney’s andparalegal fees.’135
Such clauses will contribute to legal certainty since what the court is asked
to do is simply to give effect to privately negotiated clauses and, therefore, theobjections based on res judicata and international comity may be avoided. The
precise extent to which such clauses can be given effect will depend on theirgoverning law and may give rise to a dispute of its own. They are indeed not
wholly immune from the risk of being struck out. Also, their scope may be disputed unless they are tightly drafted. Thus, with respect to the suggested clauses
mentioned above, a dispute may arise as to whether they are wide enough to cover,for example, costs incurred in making an application in vain for an antisuit injunction; and again, if a specific sum is agreed upon as damages, it may come under
scrutiny to see that it does not violate any rules against a penalty clause under theapplicable law.

XIII. Dichotomy Between the Common Law and the
Civil Law
As apparent from the foregoing analysis, the legal system and thinking of thecommon law jurisdictions are instrumental in shaping the remedy of damages forbreach of a choice-of-court agreement. The relevant differences from the civil law
system can be summarised as follows.
Firstly, mainstream common law thinking makes no dogmatic distinction incharacter between a choice-of-court agreement and substantive contracts. This
makes it possible to award damages for breach of a choice-of-court agreement justas in the case of a breach of an ordinary contract. The civil law thinking may be
more inclined to see a distinct character in a choice-of-court agreement, which maylead to a different treatment of its breach. Thus, if a breach of a choice-of-court
agreement is regarded as a procedural issue, it will be subject to procedural rules,
which may not make the remedy of damages available. Even if a choice-of-court
agreement is acknowledged to be a contract, it may be treated as a special speciesof contract for which no remedy of damages is considered to be available.

135

DOGAUCHI M., Kokusai Keiyaku ni okeru Boilerplate jyôkô o meguru Jyakkan noRyûiten [Some Points to Note on Boilerplate Clauses in International Contracts] in: NBL
2008/874(5) p. 66. It modifies the language suggested by HAMABE Y./ANDERSON K., Law
School Jitsumuka Kyôju ni yoru Eibun Kokusaitorihiki Keiyakusho no Kakikata [AGuidance on Writing International Business Contracts in English by a Law School
Professor/Practitioner] Tokyo 2007, p. 197, which reads: In the event that either party institutes any legal proceedings in any court other than the Tokyo District Court, that party shallassume all of the costs incurred in transferring said proceedings to the Tokyo District Court,
including but not limited to the other party’s attorney’s and paralegal fees.

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Damages for Breach of a Choice-of-court Agreement
Secondly, the courts of common law countries generally have power toissue an antisuit injunction to restrain foreign proceedings brought in breach of achoice-of-court agreement. The courts of most civil law countries have no equivalent power. The value of damages may be felt to be greater when it operates intandem with an antisuit injunction in a complementary fashion.136 Furthermore, anantisuit injunction provides a benchmark to gauge effectiveness as a remedy andmeasure implications for international comity. Without it, the hurdle which theproponents for the remedy of damages have to surmount may be higher since a
doubt over its effectiveness and a concern about its impact on comity may loom
larger.
Thirdly, whereas liability for breach of contract is generally strict in thecommon law legal systems, it is fault-based in the civil law legal systems. It
follows that in the latter systems, damages are not awarded for breach of a choiceof-court agreement unless the breach is intentional or negligent. That requirement
would be difficult to be satisfied particularly in some of the second category ofcases where the court first seised declines to find that there is a breach.
For those reasons, a damages claim for breach of a choice-of-court agreement is less likely to be successful in the civil law countries than in the common
law countries and under the civil law legal systems than under the common law
legal systems. Even if a court of a civil law country characterises the question as
substantive and its choice-of-law rules point to a common law legal system which
would grant a damages claim, the court may refuse to apply that law if it finds thatthe result of awarding damages would offend comity towards the court first seised
and hence would be contrary to the ordre public of the forum.
The courts of common law countries, with an antisuit injunction in theirarmoury, are more willing than the civil law counterparts to take proactive control
over the workings of international litigation provided that the case has a sufficientnexus to warrant their involvement.137 This tendency will intensify with a new addition to their armoury if they shed any remaining diffidence in awarding damages
for breach of a choice-of-court agreement. The upshot would then be a wider
divide between the common law camp and the civil law camp in their attitude andapproach to international litigation. This may accelerate the tendency among strategic drafters of favouring the common law courts in the selection of courts fortheir choice-of-court agreements. By selecting common law courts, they could
buttress their choice-of-court agreement as they would then have the option ofbringing a damages claim in the chosen common law forum, which would be more
open to the idea of embracing such a claim than the civil law counterparts andbecause the governing law would then be likely to be the law of the chosen forum,
136

Thus, JOSEPH D. (note 86), p. 404, argues that if an antisuit injunction is available
to prevent breach of a choice-of-court agreement, damages should be available to compensate for loss suffered consequent on breach.
137
E.g. In Airbus Industrie G.I.E. v. Patel [1999] 1 AC 119, the House of Lords heldthat comity required that the English forum should have a sufficient connection with thematter in question to justify indirect interference with foreign proceedings by means of anantisuit injunction.

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Koji Takahashi
which is ex hypothesi a common law legal system, under which the claim would
have a better chance of success than under the civil law counterparts.

XIV. Conclusion
The foregoing analysis has revealed that whether, in what circumstances, and towhat extent damages may be awarded for breach of a choice-of-court agreement
depend on a myriad of factors. Thus, the claimant may not have a good chance of
success if the court treats the breach of a choice-of-court agreement as a procedural
matter. If it is treated as a substantive matter, its success depends largely on thegoverning law of the claim. The governing law, in turn, depends on the legal basis
in which the claim is framed. Where it is framed in contract and is governed by acivil law legal system, it may encounter difficulties in overcoming the fault-based
system of contractual liability in certain cases. Furthermore, the court before which
the claim is made must have jurisdiction, whether it is in the forum first seised, orthe forum chosen by the choice-of-court agreement, or another forum. Where theclaim is made in the forum first seised, it will not be successful if the court has
earlier made irreconcilable decisions. There must be an end to the jurisdictional
battle also in the cases where the claim is made in another forum. Thus, thedecisions of the court first seised may be recognised as having the res judicata
force of precluding the claim. Furthermore, it may be queried whether awarding
damages would not be contrary to international comity towards the court firstseised. Comity should, however, be put in the context of the far-from-ideal realityof international litigation. If a party is aggrieved by his opponent’s unscrupulous
litigational behaviour, the courts should not use comity as a pretext for renouncing
its responsibility towards him if he has such a sufficient contact with the forum as
to warrant extending to him a helping hand. In examining implications forinternational comity, a useful comparison may be made with an antisuit injunction,an established remedy in the common law countries for breach of a choice-of-court
agreement. An antisuit injunction offers a useful point of comparison also inrespect of effectiveness as a remedy. In both respects, the picture is mixed and,
therefore, a choice should be wisely made between the two remedies to best fit thesituation at hand. The effectiveness of the remedy of damages has been doubted
due to the perceived difficulty of quantification. However, upon a close analysis,
the difficulty differs depending on the type of cases. The duty to mitigate loss orsimilar concepts may be pleaded in defence in various contexts but will not befound persuasive in most cases. A practical solution to the uncertainty over the
success of the damages claim would be an express clause on damages. It may,
however, give rise to a dispute of its own.
Two threads run throughout the present analysis. They are the distinction
between the first and second categories of cases described in Section III and thecontrasts between the common law and civil law camps.

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Damages for Breach of a Choice-of-court Agreement
As between the two categories of cases, the damages claim is more likely to
succeed in the first category of cases, i.e. where the court first seised dismisses or
stays its proceedings. The reasons include that negative implications for international comity are less serious, that the quantification of damages is less difficult,and that if the governing law adopts the system of fault-based liability, therequirement of negligence or intent in breaching the agreement will be met withless difficulty. In the second category of cases, i.e. where the court first seised
decides to hear the case on the merits, the claim will face more obstacles. Nevertheless, practical justice demands that the law should be crafted and interpreted toallow the claim at least in the cases displaying an unscrupulous behaviour, forexample, where the plaintiff has flouted a plainly valid choice-of-court agreement
by bringing an action before a remote court which would, to his knowledge, exercise an exorbitant jurisdiction and deny effect to any foreign choice-of-court
agreement.
The idea of awarding damages for breach of a choice-of-court agreement
has its genesis in the common law system. Whether the seed growing in the common law field can be transplanted onto the civil law ground remains to be seen.
The present article has identified some conceptual and normative hurdles to overcome. If the common law courts cast off any remaining hesitancy in granting this
remedy, the divide between the common law and the civil law camps in theirapproach to international litigation will become wider, which may affect thestrategy of drafters of choice-of-court agreements.

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