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Consultant (international arbitration and litigation), Herbert Smith Freehills
published in The Australian Law Journal, Volume 87(2), 2013
With the enormous increase in international trade and commerce in recent years the risk for a party of being forced to litigate at great distance from home, with associated costs and inconvenience, has become very real. The inclusion of a jurisdiction clause in a contract, whereby parties agree to submit any disputes between them to a stipulated court, is therefore an important means of mitigating that risk. In an article which reviewed the Australian law on interpretation and enforcement of jurisdiction clauses up to 1997, shortly after the decision of the High Court in Akai v People’s Insurance Co Ltd[1], it was suggested that Australian courts had been occasionally unsupportive in their approach to such clauses.[2] Three features of the jurisprudence were particularly noted: first, in interpreting jurisdiction clauses there was a tendency to find such clauses ‘non-exclusive’ rather than exclusive, secondly, even in the context of exclusive clauses, there was an excessive inclination to allow factors of convenience to preclude enforcement and thirdly, there appeared a willingness to allow Australian plaintiffs to circumvent such clauses by pleading breaches of Australian statutes – in particular the Trade Practices Act 1974 (Cth) (TPA) (now the Australian Consumer law (ACL) in Sch 2 to the Competition and Consumer Act 2010 (Cth)) (CCA)). By contrast, in other Australian decisions, it was noted that courts had given greater recognition to jurisdiction clauses.[3]
All three elements when considered together led to the observation that, at that time, Australian courts as a whole were less assiduous than they might have been in giving effect to jurisdiction clauses. Such an approach arguably led to an undermining of contractual expectations and greater uncertainty in international commerce as a major tool in limiting jurisdictional risk and exposure – the jurisdictional clause – was not fully appreciated. The important role of jurisdiction clauses in combating the practice of forum shopping[4] was also arguably insufficiently appreciated. The purpose of this article is to assess whether the Australian record has changed since 1997, in particular, has the growing awareness of globalisation and methods of international dispute resolution such as arbitration had an impact on courts’ attitudes?
The overall conclusion is positive: Australian courts in 2012 are generally more supportive of jurisdiction clauses than was the case in 1997 and a type of cross-fertilisation is occurring with the increasingly liberal approach to enforcement of arbitration agreements being adopted in cases involving jurisdiction clauses. For the purposes of analysis, the discussion in this article will focus first on the interpretation of jurisdiction clauses and then on their enforcement. Finally, reference will be made to some important other matters which have arisen in the Australian decisions concerning jurisdiction clauses.
II. Interpretation of Jurisdiction Clauses
Forum jurisdiction clauses
The most important recent judicial statement on the interpretation of jurisdiction clauses appears in the judgment of Brereton J of the Supreme Court of NSW in Ace Insurance Ltd v Moose Enterprise Ltd.[5]
Ace Insurance concerned a clause in the following terms:
‘Should any dispute arise concerning this policy, the dispute will be determined in accordance with the law of Australia and the States and Territories thereof. In relation to any such dispute the parties agree to submit to the jurisdiction of any competent court in a State or Territory of Australia.’
It is first significant to note that the above clause is a ‘prorogation’ clause, that is, a provision which identifies the courts of the local forum in which the case is being adjudicated as opposed to a ‘derogation’ clause which selects a foreign court.[6] Nevertheless, the court’s approach to interpretation of jurisdiction clauses in Ace Insurance does not seem to be affected by this distinction and the principles articulated would seem applicable to local and foreign clauses alike (with one exception mentioned below).
Brereton J first noted that ‘not every submission to jurisdiction involves a promise not to sue in a foreign jurisdiction; it will do so only if it is an exclusive jurisdiction clause’.[7] The judge here is reiterating the well established distinction in Australian law between ‘exclusive’ and ‘non-exclusive’ jurisdiction clauses. Exclusive clauses create a contractual obligation to sue or be sued in the stipulated jurisdiction with the bringing of proceedings by a party to the clause in a court other than the chosen tribunal considered a breach of contract.[8] Non-exclusive clauses, by contrast, identify a place for litigation but allow parties to proceed elsewhere if they wish.
Brereton J next referred to a number of English and Australian decisions on the interpretation of jurisdiction clauses, the effect of which was as follows:[9]
‘First, while the absence of the word “exclusive” is not determinative, the distinction between an exclusive and non-exclusive jurisdiction clause is sufficiently well-known and the facility of making the clause manifestly an exclusive jurisdiction clause so straightforward that its absence is not merely neutral but tends against the clause being an exclusive jurisdiction clause. Secondly, where the courts of the selected forum would have jurisdiction in any event, this tells in favour of a clause being an exclusive jurisdiction clause; a fortiori where they would be the ‘natural forum’. Thirdly ... in respect of insurance policies ... in the case of ambiguity, the court will more readily incline to a construction that favours the insured. Fourthly, use of words such as “all” or “any” disputes and mandatory words such as “shall”, tell in favour of a clause being an exclusive jurisdiction clause.’
The combined effect of the above principles is that the question of whether a jurisdiction clause is exclusive or not remains a matter for the intention of the parties. The court does not approach the issue of construction with a predisposition one way or another but will be guided by the parties’ language (in particular, the presence or absence of the word ‘exclusive’). If terminology of obligation is used then the court will incline to an exclusive interpretation.[10] Where the clause is a prorogation agreement and the defendant has been sued in its ‘home’ jurisdiction then this will be another factor suggesting exclusivity.
Brereton J then proceeded to apply the principles articulated above to the clause before him and found it to be exclusive. First, the judge noted that although the word ‘exclusive’ was not used, the reference to ‘any such dispute’ suggested an obligatory referral to the nominated court was intended. Secondly, because the two parties to the clause were both Australian corporations, who had made their contract in Australia and chosen Australian law to govern it, Australian courts would ‘have jurisdiction in any event’ and Australia was ‘the natural forum’.[11]
The same result to that in Ace Insurance was reached in respect of another Australian prorogation clause in Armacel Pty Ltd v Smurfit Stone Container Corporation.[12] Interestingly the clause there had fewer ‘exclusive’ features than the provision in Ace Insurance but it was the prorogative aspect which seemed to be decisive.
The clause provided: ‘This Agreement must be read and construed according to the laws of the State of New South Wales, Australia and the parties submit to the jurisdiction of that State’. The action concerned a licence agreement between an Australian plaintiff and a US defendant, described by the court to be both ‘business people negotiating at arms’ length who must be presumed to have intended some certainty as to where their disputes would be litigated’.[13] Yet the crucial element in favour of exclusivity was that the courts of New South Wales ‘would have jurisdiction [in any event] by reason of the choice of law clause’.[14]
Consequently, a prorogation agreement will be given exclusive effect both where the defendant is an Australian corporation as in Ace Insurance (and would be subject to common law service) and a foreign party amenable to service out of the jurisdiction, as in Armacel. Such a view suggests that it will be a rare case where a defendant to Australian proceedings can successfully resist jurisdiction in the context of a local exclusive jurisdiction clause and this issue is addressed again below at III.D.
The above principles of construction articulated by Brereton J in Ace Insurance have also been applied in the context of foreign (that is, non-Australian) jurisdiction clauses, although in most cases since 1997 the status of the clause in terms of its exclusivity or non-exclusivity has usually been clear.
In two cases, Laminex (Australia) Pty Ltd v Coe Manufacturing Company[15] and McGuid v Office de Commercialisation et d’Exportation[16] courts found clauses to be exclusive even though that word was not expressly mentioned, on the basis that the parties used other words of obligation. In Laminex it was stated that ‘venue shall be in ... Oregon for any actions arising hereunder’, and in McGuid the clause ‘provided that any dispute will be resolved ... by the courts in Casablanca’.[17]
By contrast, in another very recent decision, Faxtech Pty Ltd v ITL Optronics Ltd[18] the court expressly relied upon the absence of the word ‘exclusive’ to hold a clause to be non-exclusive. The circumstances were however unusual: the parties had entered into an agreement in 2005 which contained a jurisdiction clause in which the word ‘exclusive’ was expressly used but in a subsequent contract in 2010, which superseded the 2005 version, a jurisdiction clause was included which omitted the word. The court held that given the discrepancy between the 2005 and 2010 versions, such an omission must have been deliberate and reflected an intention on the part of the parties that the clause was not to be exclusive.[19]
In two other Australian decisions since Armacel, another possible canon of interpretation for determining whether a jurisdiction clause is exclusive has been suggested, arising out of the English Court of Appeal decision in Continental Bank WA v Aeakos Compania Naviera SA.[20]
In Continental Bank the English court had to consider a clause in two parts, the first stating that each party (the bank and the borrower) ‘irrevocably submitted’ to the jurisdiction of the English courts and the second part providing that ‘the bank reserves the right to proceed under this agreement in the courts of any other country claiming or having jurisdiction’. According to the court, the combined effect of both parts of this clause was that the borrower was required to submit its claims against the bank to the English court (that is the clause was exclusive as applied to this party) but the bank was free to sue the borrower elsewhere (that is, the clause was not exclusive as applied to the bank). The result was, therefore, that the borrower’s action in Greece against the bank was restrained by anti-suit injunction on the ground that the clause was exclusive and prevented the borrower from suing anywhere other than in England.[21]
While a possible question could be raised as to the onesideness of this outcome it is arguably acceptable in the context of freely bargained agreements between commercial parties. Of course, had one of the parties been in a less advantaged position, such as an employee or a consumer, then more substantial objections could be made to the conscionability of such a clause.
Importantly for present purposes, the Continental Bank case was applied by an Australian court to reach a similar result in respect of an almost identical two-part clause in Reinsurance Australia Corporation Ltd v HIH Casualty and General Insurance (in liq).[22] By contrast, in Autotrop Sdn Bhd v Powercrank Batteries Pty Ltd,[23] where only the first part of the Continental clause was present – that is an irrevocable submission by the parties to the jurisdiction of a foreign court – this provision was found only to be non-exclusive. ‘There [was] no reservation in favour of one party in the clause under consideration ..., as there was in Continental Bank’.[24]
The Continental Bank principle should therefore be added to the interpretive guidelines for Australian courts provided by Brereton J in Ace Insurance above.
Hence, the current Australian position continues to draw a sharp distinction between exclusive and non-exclusive jurisdiction clauses. While this may seem an obvious and uncontentious point, it is worth noting that this approach is not adopted in the European Union where under art 23(1) of the Brussels I Regulation jurisdiction clauses are presumed to be exclusive unless clear words to the contrary are used. An identical approach to the EU position is taken in art 3(b) of the 2005 Hague Choice of Court Convention, which may assume greater significance for Australia if the Federal Government proceeds to ratify and implement that instrument in Australian law. Specifically, if the Hague Convention were adopted then the principles of construction set out in the Ace Insurance case would no longer form part of Australian law.
B. Scope of the clause
1. Subject matter scope
A second issue of interpretation which arises in the context of jurisdiction clauses concerns the scope of such provisions. The question here is not whether a clause is exclusive or not but rather whether the plaintiff’s claims, in the proceedings which are sought to be stayed, fall within the wording of the jurisdiction clause. Such claims must fall within the scope of the clause or else they cannot be the subject of a stay order.
Unlike the first question of interpretation above, where the law of the forum has been almost invariably applied by Australian courts to determine whether a clause is exclusive,[25] it is well established that the law governing the contract in which the clause is contained determines the issue of scope. Yet curiously parties to Australian litigation have rarely relied on foreign law on this issue. Such an omission may possibly be explained by ignorance of the choice of law rule or because the parties see no advantage in pleading foreign law as opposed to relying on Australian law principles. Yet practitioners should be aware of the strategic possibilities that pleading foreign law holds, even on questions of interpretation of contracts where divergences between legal systems may be thought to be narrower.
Since 1997 there have been a number of Australian decisions which have addressed the issue of the scope of jurisdiction clauses but the future development of this area has been influenced strongly by a case on the scope of arbitration clauses, the decision of the Full Federal Court in Comandate Marine Corp v Pan Australia Shipping Pty Ltd.[26] The Full Court there held that claims both for breach of a ship charter contract and for misleading and deceptive conduct under the TPA fell within a clause in the contract which referred to London arbitration ‘all disputes arising out of this contract’. What was particularly significant about this finding was that the TPA claims were based on representations allegedly made by the defendant to the plaintiff prior to the parties’ entry into the contract.
In a prior Full Court decision, eight years earlier,[27] it had been held that similar pre-contractual claims fell outside an almost identically worded arbitration clause and so Comandate represents a major change to the law. Allsop J, who gave the lead judgment, emphasised that party autonomy, the needs of participants in international commerce and the sensible commercial presumption that parties did not intend to have their disputes heard in multiple countries all supported a broad and flexible approach to the interpretation of arbitration agreements.[28] The effect of this decision is that courts are now required to construe arbitration clauses broadly to ensure that the parties’ contractual expectations are not defeated by actions splintering between different fora. Where possible, therefore, courts should aim to consolidate all claims in a proceeding in the one tribunal. Such a result also furthers the goal of efficiency in dispute resolution and avoids the risk of inconsistent legal and factual results between different tribunals.
Interestingly, Allsop J foreshadowed in a decision two years before Comandate, Incitec v Ltd v Alkimos Shipping Corporation,[29] that a similar approach would now be taken to jurisdiction clauses, suggesting that such clauses, where possible, should also be given ‘a wide or generous construction’.[30]
Similar sentiments have been more recently expressed by the NSW Court of Appeal in Global Partners Fund Ltd v Babcock & Brown.[31] Spigelman CJ, delivering the judgment of the court, approved the statements from Comandate above noting that arbitration and exclusive jurisdiction clauses ‘have frequently been treated as legally cognate’ with authorities on the scope of arbitration clauses equally applicable to the jurisdiction clause context.[32] Further, in an international commercial context, where parties agree an exclusive jurisdiction clause, there is a presumption that they did not intend the inconvenience of having possible disputes from their transactions heard by multiple tribunals ‘with the consequent prospect of divergent findings’.[33] Also, the court noted, the adoption by commercial parties of an exclusive jurisdiction clause reflects a conscious policy choice of a particular civil dispute resolution system for its ‘speed and efficacy’ and the ‘competence and skill of its lawyers and judges’.
Such factors are powerful considerations in favour of Australian courts upholding the parties’ bargain.[34] These policies also support a broad approach to the interpretation of jurisdiction clauses, in particular, where parties use the expression ‘any dispute arising in connection with’, this wording should be considered as broader in scope than the phrase ‘arising from’ and clearly extending ‘beyond disputes under the contract’.[35]
The expansive approach to interpretation encouraged by Babcock & Brown was embraced recently by Emmett J of the Federal Court in Yperion Technology SAS v Luminex Pty Ltd.[36] In Yperion, the Court had to consider a foreign exclusive jurisdiction clause in a distribution agreement which referred to the Paris Commercial Court ‘all disputes arising out of or in connection with the validity, interpretation or performance of the Agreement’. The court found that the claims for breach of the distribution agreement, misleading and deceptive conduct under the TPA and the ACL and trademark and copyright infringement all fell within the scope of the above clause, being matters concerned with ‘the performance of the agreement’.[37] The court noted that the phrases were ‘of broad import’ and should be ‘interpreted liberally’ with the intention being ‘that all disputes that as a matter of substance arise from the contractual relationship... be determined by the same tribunal’.[38]
Yet the broad instructions to courts in Comandate and Babcock & Brown do not render the wording of exclusive jurisdiction clauses entirely redundant. Where parties use narrow words of reference with the apparent intention of limiting the range of disputes to be submitted to the chosen jurisdiction, then an Australian court will have no choice but to allow claims falling outside the scope of the clause to proceed in the forum.
Such a situation arose in the Laminex case.[39] There the court had to consider a clause in a sales agreement which provided that ‘the terms, conditions and covenants herein shall be governed by the laws of the State of Oregon and venue shall be in Multnomah County, Oregon for any actions arising hereunder’. Laminex, an Australian company sued Coe, a US company for common law negligence, breach of contract and breaches of the implied warranties under Pt V Div 1 of the TPA. While the court noted the trend towards a broader construction of dispute resolution clauses, both arbitration and litigation, the problem here was that the parties limited the scope of their clause to ‘actions arising [under] the terms, conditions and covenants’ of the general conditions for sales. Claims in tort and under Pt V Div 1 of the TPA were therefore not embraced.
Similarly, in Vetreria Etrusca Srl v Kingston Estate Wines Pty Ltd[40]a clause in a supply agreement which referred ‘any disputes... arising from the interpretation, execution or application of this contract’ to the Florence courts was held not to embrace a claim for breach of the agreement based on the provision of defective goods. In that case however, the court was also troubled by the accuracy of the English translation of the original Italian provision.
Australian courts have therefore not wholly endorsed the English law approach pioneered by the House of Lords in Fiona Trust & Holdings v Privalov.[41] According to this view, fine distinctions between wordings in jurisdiction and arbitration clauses are now to be disregarded in favour of a general policy of presuming that all claims relating to one transaction are brought before one tribunal. By contrast, the message to parties in the Australian context is that if they want to maximise the chances of having their jurisdiction clauses enforced, they must at least provide the courts with sufficiently generous wording to achieve this result.
2. Party scope
A further interesting issue on the scope of jurisdiction clauses, which has arisen recently, is whether an exclusive jurisdiction clause between parties A and B may also apply to claims brought against C where C is not a party to the contract in which the clause is contained.
The Babcock & Brown case concerned a series of entities which were sued in New South Wales and sought to invoke the terms of an English exclusive jurisdiction clause to stay the proceeding despite their not being parties to the agreement in which the clause was contained. The Court of Appeal held that because the agreement conferred rights on the entities as ‘identified non parties’ by granting them a right to indemnity in respect of the substantive claims brought by the plaintiff, the exclusive jurisdiction clause ‘should be construed as binding the parties with respect to proceedings in which such an indemnity may arise’.[42] Accordingly and exceptionally, the clause could be invoked by the non-parties.
This view was supported by the fact that the use of the broad words in the jurisdiction clause, namely any dispute ‘arising out of or in connection with this agreement’ indicated that the clause should embrace ‘claims against non-parties who are so closely connected with the implementation of the contract as are [the present entities]’.[43]
This decision is an enlightened and significant one and starkly reveals the change in attitude among most Australian courts to jurisdiction clauses in the past 10 years. On the issue of third parties, the Babcock & Brown decision has been recently followed by Emmett J of the Federal Court in the Yperion case.[44] As noted above, this case concerned a series of claims brought by a French manufacturer against an Australian distributor with the defendant being granted a stay of multiple claims based on a Paris exclusive jurisdiction clause. A number of other entities were also joined as defendants against whom precisely the same legal and factual allegations were made as had been made against the distributor. The court granted a stay of these claims as well, noting that while the other entities were not parties to the jurisdiction clause, the claims against them fell within the wide wording of the clause, namely, they were ‘connected with or ar[o]se out of, the performance of the [distribution] agreement’.[45]
III. The Enforcement of Jurisdiction Clauses
The second part of this article examines the issue of enforcement of jurisdiction clauses. Enforcement of a foreign jurisdiction clause is normally effected by the forum court granting a stay of its proceedings to enable a foreign action to proceed unimpeded. By contrast, a forum jurisdiction or prorogation clause will normally be enforced by the forum court refusing to stay its proceedings or, where a foreign court action has been commenced, by the forum court granting an anti-suit injunction to restrain the pursuit of the foreign proceeding.
The bulk of Australian cases have concerned the first situation, that is, under what circumstances should an Australian court decline jurisdiction in favour of a foreign court chosen by the parties? While prior to 1997 Australian courts were arguably inconsistent towards and at times arguably insufficiently deferential to foreign jurisdiction clauses, more recent decisions do reflect a change in position, again encouraged by parallel developments in the context of arbitration clauses. Note that in this context the focus is on foreign exclusive jurisdiction clauses; non-exclusive clauses have always been treated with less deference and are discussed at III.C below.
Two arguments have often been raised by plaintiffs, suing in Australia, to avoid enforcement of a foreign exclusive jurisdiction clause. The first is that the balance of convenience, in the sense of the locations of the parties, the evidence and the cause of action favour trial in Australia over that in the nominated foreign forum. The second argument is that the plaintiff would be denied a legitimate, juridical advantage if forced to sue abroad due to the unavailability of rights under Australian statute in the foreign forum.
The present author has been critical of both such arguments, finding that Australian courts have often given them excessive weight at the expense of protecting contractual expectations and certainty[46] through enforcement of foreign jurisdiction clauses. What was notable about the Australian decisions which allowed relatively easy circumvention of foreign jurisdiction clauses was that they appeared inconsistent with the principles established by the High Court as early as 1950.
In Huddart Parker v The Ship ‘Mill Hill’[47] Dixon J referred with approval to English authority which indicated that where the parties had agreed a foreign exclusive jurisdiction clause ‘the courts begin with a firm disposition in favour of maintaining that bargain unless strong reasons be adduced against a stay’.[48] There is therefore a presumption in favour of a stay of local proceedings where the parties have entered into a foreign exclusive jurisdiction clause with the presumption only rebutted where exceptional circumstances are shown by the plaintiff. Such language would seem to preclude arguments of mere convenience as a basis for resisting enforcement of the clause. Yet, in a number of decisions prior to 1997, courts accepted such a contention. In more recent Australian decisions, however, a change of approach is apparent with courts appearing much more cognisant of the value and role of exclusive jurisdiction clauses.
The pro-enforcement view was put most forcefully and eloquently by Spigelman CJ, giving the judgment of the NSW Court of Appeal in Babcock & Brown[49] where he noted that:[50]
‘the case law with respect to exclusive jurisdiction clauses [should] reflect important policy considerations, relevantly, that parties should be held to their contractual bargains and the resolution of disputes arising from contractual arrangements should occur in a coherent and consistent manner and as expeditiously and efficaciously as possible. This suggests that the fewest different jurisdictions should be involved in resolving the fewest number of separate proceedings’.
Such factors, in Spigelman CJ’s view, emphatically support the ‘strong reasons’ test for avoiding enforcement of a foreign exclusive jurisdiction clause.
Furthermore, such a test will not be satisfied by a plaintiff simply showing that factors of convenience favour trial in Australia. Such an inquiry is not ‘pertinent to the exercise of the discretion to order a stay on the basis of [an] exclusive jurisdiction clause ... the approach applicable to forum non conveniens [applications] is not applicable to an exclusive jurisdiction clause’.[51] Such a view is an important reminder that an exclusive jurisdiction clause imposes a contractual obligation to sue in the nominated court and should not be easily evaded by mere appeals to post-dispute convenience.
Other courts have confirmed that matters of convenience or connection are generally of little relevance in an application to enforce a foreign exclusive jurisdiction clause[52] although in some cases courts have referred to connections with the foreign country to support their conclusion in favour of a stay.[53] So for example, in McGuid the court referred to the many connections between the action and Morocco (for example it was the governing law of the contract, French was the language of the contract and other relevant parties in the proceeding were Moroccan) to bolster its conclusion that a stay should be ordered in favour of the Casablancan courts.
Where however, the plaintiff is an Australian individual acting as a consumer, for example, who sues a foreign corporation in an Australian court then principles of convenience properly assume much greater significance in determining whether a stay will be granted on the basis of a foreign exclusive jurisdiction clause. There is obviously a great difference between ‘a clause agreed between international commercial parties’[54] with ample resources to negotiate and protect their position and a clause presented to a consumer by a foreign corporation on an almost ‘take it or leave it’ basis. Also, requiring an Australian consumer to sue a foreign corporation in the defendant’s home jurisdiction is likely to be highly onerous and oppressive given the geographical distance from Australia to many significant commercial centres.[55]
Hence, in Knight v Adventure Associates,[56] an Australian resident plaintiff who was injured abroad on a shipping cruise was allowed to sue a foreign defendant corporation for personal injury in NSW despite the existence of a foreign exclusive jurisdiction clause. Here, almost all connections were with Australia and almost none were with the jurisdiction stipulated in the clause.[57] Similarly, in Quinlan v Safe International Försäkrings AB,[58] an Australian individual, also injured abroad, was entitled to sue a Swedish insurer with multinational operations, in Western Australia, which was the plaintiff’s place of residence and where all her treating medical practitioners were located. Simply, it would be far less onerous for the defendant corporation to contest litigation in Western Australia than for the plaintiff to have to sue in Sweden.
Note that in both Knight and Quinlan there was also an issue about whether the plaintiff would lose rights under Australian legislation if forced to sue abroad. This issue is considered in detail below at III.B.
It seems therefore that plaintiffs in Australian actions involving foreign exclusive jurisdiction clauses will no longer be able simply to rely upon matters of convenience or connections with the forum to avoid a stay, at least where they are not individuals as opposed to corporations.
While inconvenience to the persons who are parties to the clause will generally be of limited significance in determining whether a clause should be enforced, the position may be different where the interests of third parties are involved. The issue of third parties and foreign jurisdiction clauses was discussed above in the context of whether claims by such persons may be found to fall within the scope of a clause entered into between others. Here the focus is different: can a party to a foreign jurisdiction clause avoid enforcement of the clause by arguing that there exist other parties to the proceedings, not bound by the clause, who will be prejudiced by a stay being ordered?
It was this context which arose in Incitec Ltd v Alkimos Shipping Corporation.[59] Incitec involved proceedings brought by a corporation (Incitec) against two other corporations (ASC and Hyundai) arising from a dispute concerning the carriage of cargo. Another entity, Sumitomo, also sued ASC and ASC then sought to file cross claims against Hyundai both in the first and second proceedings. Hyundai sought a stay of the cross claims based on a foreign exclusive jurisdiction clause in the charter contract which it had entered into with ASC.
As discussed above, the court emphasised the importance of courts making a broad interpretation of foreign exclusive jurisdiction clauses and maintaining a strong predisposition in favour of their enforcement. Yet where the effect of enforcing such a clause would be to prejudice third parties and allow foreign litigation to ensue with the serious risk of inconsistent findings between Australian and foreign courts, then a stay should exceptionally be refused. Here there were plaintiff third parties (for example, Incitec and Sumitomo) who were not bound by the jurisdiction clause yet may have found themselves joined to the English proceedings (as well as involved in the Australian proceedings) if a stay of the Australian action was granted.[60] Furthermore, even if these third parties were not joined to any English proceedings, their Australian actions were very likely to be duplicated and potentially undermined by parallel litigation in England. In particular, there was a serious danger of the English and Australian courts coming to different conclusions about the same facts and evidence, which was a result not in accord with the due administration of justice.
While the logic of the Incitec decision is compelling, there may however be circumstances where the presence of other persons in the proceeding, not bound by a jurisdiction clause, is less influential. For example, if a plaintiff who was bound by a foreign exclusive jurisdiction clause sought to evade such a clause entered into with the defendant by joining a second defendant who was not bound by the clause then the matter may be treated differently. If the plaintiff’s claim against the second defendant was in good faith and seriously arguable then an Incitec-type approach in refusing a stay may be justified. But if by contrast the plaintiff’s claim against the second defendant is merely a ‘colourable’ exercise to engage the jurisdiction of the Australian court it should be less sympathetically treated. Note that in Incitec itself the court may have been influenced by the fact that the person seeking to avoid the jurisdiction clause was not a plaintiff who had commenced a proceeding but a defendant who had brought third party claims against another entity who relied on the clause. In such a situation the defendant’s third party claims can be seen as effectively a defensive measure in response to the original claim brought by the plaintiff.
It is also interesting to see whether such an argument of inconvenience would be tenable in proceedings under the Hague Choice of Court Convention, assuming again that such treaty is implemented in Australia. Article 6 of the Convention provides that a court in a Contracting State to the Convention must decline jurisdiction when confronted by an exclusive choice of court agreement designating the courts of another member state to the Convention. On its face this provision would seem to preclude arguments for avoiding enforcement of a foreign exclusive jurisdiction clause based on convenience such as the residence of the parties and the location of evidence.[61]
It seems clear therefore that, consistent with the current Australian law position, inconvenience to the parties to the jurisdiction clause will be no defence to enforcement under the Hague Convention. The case mentioned above of a plaintiff who simply joins a second defendant to a proceeding in the forum in an attempt to circumvent a foreign exclusive clause with the first defendant would likely be similarly treated. The Incitec example is more difficult since the problem here is that the interests of third persons, themselves not party to the jurisdiction clause, are likely to be harmed by being forced to litigate in a foreign country to which they did not submit. Nevertheless, the explanatory report to the Convention suggests that in any case involving multiple parties, enforcement of a jurisdiction clause may not be refused merely on the ground that fragmentation of litigation may result.[62] If this view is adopted by Australian courts, then the result in Incitec would be different under the Convention.
Loss of Australian statutory rights
The other argument commonly invoked by plaintiffs to avoid foreign exclusive jurisdiction clauses in cases before 1997 was that they would be denied a legitimate juridical advantage in the foreign court by not being able to access rights under Australian legislation. The Akai case itself is an example of a successful resort to such argument where it was found that an English exclusive jurisdiction clause should not be enforced in an insurance policy between a Singaporean insurer and a NSW insured because the insured would not be able to bring a claim under the Insurance Contracts Act 1984 (Cth) in a suit in England.
In cases since 1997 this argument has again been frequently aired and often successful. The present author was critical of this tendency in the earlier Australian decisions, at least where the parties to the clause were substantial, international corporations, arguing that it was contrary to both contractual expectations and comity to allow plaintiffs to subvert foreign exclusive jurisdiction clauses in this way. Contractual expectations dictate that the parties should be held to their agreement and comity requires deference and regard be paid by Australian courts to foreign laws and institutions.
Surely if an Australian entity wants to preserve its rights under the ACL, for example, then it should negotiate for such rights to be embodied in the contract. While foreign parties may baulk at the inclusion of such a provision, this is arguably a necessary consequence of engaging in international trade and commerce: a party may have to trade off its rights under Australian law in exchange for other commercial benefits. If the Australian party fails to preserve its rights in this way, then it should be deemed to have waived such protections when a dispute arises. So, the mere fact that Australian statutory rights would be unavailable to an Australian plaintiff corporation should not be a basis for refusing a stay. This argument is strengthened where the defendant produces evidence that equivalent relief under foreign law would be available to the plaintiff in the foreign proceeding, thus nullifying any suggestion of loss of advantage.[63] In principle, however, the defendant should not, as a condition of obtaining a stay, be required to provide such evidence since it is the plaintiff who is seeking the court’s permission to breach its contract.
The assumption in the above discussion, however, is that the parties to the contract are both commercial entities with the resources and means to freely contract; an individual consumer stands in an entirely different position.
In Commonwealth Bank v White[64] Byrne J of the Supreme Court of Victoria allowed an Australian individual ‘Lloyds name’ (presumably of some financial means) to proceed in Victoria against Lloyds UK notwithstanding the fact that the parties had entered into English exclusive jurisdiction and choice of law clauses. A major factor in the court’s decision was the fact that the plaintiff, in any English proceedings, would be unable to bring a claim under the TPA ‘which he enjoys engaging in commerce in Victoria by virtue of legislation in force in this jurisdiction’.[65]
While at first glance this decision appears to give rise to the same criticism as was mentioned above in its tendency to undervalue foreign exclusive jurisdiction clauses, there is a significant distinguishing feature about this case which puts it in another category. Here the plaintiff was also seeking to impugn the exclusive jurisdiction clause itself in the Australian action on the ground that it had been imposed on the plaintiff in an unconscionable manner.[66] Since the very clause which formed the basis of the application for a stay was under attack in the Australian proceeding, the justification for the Victorian court in retaining jurisdiction becomes stronger.[67]
Another case in the ‘commercial’ category was Nicola v Ideal Image Development Corporation.[68] Nicola involved plaintiffs who were doctors and a company run by them who sued a US corporation in New South Wales for, amongst other things, breach of s 52 of the TPA. The US corporation sought a stay of proceedings based on a Floridan exclusive jurisdiction clause with the plaintiff raising two arguments in opposition.
The first was that the plaintiff would lose a juridical advantage if forced to litigate in the US because there was some doubt as to whether a Florida court would apply the TPA. Further, it was argued, the defendant could only obtain a stay if it could persuade the Australian court that the foreign tribunal could adjudicate the TPA claims. The court rejected the argument, saying that if a burden or onus of proof existed it was instead on the plaintiff ‘to establish by clear evidence that their claim was not recognisable before the courts of Florida’ and such evidentiary onus had not been discharged.[69] Placing the burden of proof in respect of the juridical advantage argument on the plaintiff is entirely appropriate since it is that party who is seeking to extricate itself from its contractual obligations. A similar approach was taken in the Yperion case above[70] where a stay was granted in part because the plaintiff failed to show that Australian statutory claims were not justiciable before a foreign court.
This approach is highly significant as it reverses the position taken in Akai and other Australian decisions[71] which effectively placed the burden on the defendant to negate the existence of any juridical advantage to the plaintiff in suing in the Australian forum. Such a shift in the burden of proof should facilitate the enforcement of foreign exclusive jurisdiction clauses and is therefore to be welcomed.
The plaintiff’s second argument in Nicola to overcome the foreign exclusive jurisdiction clause was slightly different: that s 52 and other provisions of Part V of the TPA were mandatory rules that invalidated foreign exclusive jurisdiction clauses in proceedings in an Australian court. To fully appreciate this argument, some background information on Australian statutory provisions which invalidate foreign jurisdiction clauses is required.
It is important to note that there are a few Australian legislative provisions which expressly render foreign jurisdiction clauses invalid. Perhaps the most famous example is s 11(2) of the Carriage of Goods by Sea Act 1991 (Cth) (COGSA) which renders void any foreign jurisdiction clause in a contract for the carriage of goods by sea involving shipment either from an Australian port to a foreign country or to an Australian port from abroad.[72] Another, less explicit, example is contained in the combined operation of ss 8 and 52 of the Insurance Contracts Act 1984 (Cth) (ICA) which was found to invalidate the foreign jurisdiction clause in Akai. Section 8 provides, in effect, that the ICA applies to any contract governed by the law of an Australian state with any express or implied choice of a foreign law (which was held to include an exclusive jurisdiction clause) to be ignored in making that determination. Section 52 invalidates any provision in an insurance contract which ‘purports to exclude, restrict or modify ... to the prejudice of a person other than an insurer, the operation of this Act’ (which again was held to include a foreign exclusive jurisdiction clause). Sections 67 and 68 of the TPA (now ss 67 and 64 of the ACL) are in similar terms to ss 8 and 52.
The question for the court in Nicola was whether s 52 and other provisions of Part V of the TPA amounted to statutory provisions which had the effect of invalidating the foreign exclusive jurisdiction clause. The court rejected the argument, noting that s 86 of the TPA conferred jurisdiction in respect of a number of courts in respect of breaches of Part V and was not expressed in the same terms as ss 67 and 68.[73] There was therefore insufficient evidence that the Parliament intended to abrogate foreign jurisdiction clauses in any action in an Australian court involving breaches of Part V of the TPA. Such a view must surely be correct or else a plaintiff could defeat a foreign exclusive jurisdiction clause in every case merely by commencing an action in an Australian court for breach of Part V of the TPA.[74] The court’s reasoning would equally apply in the context of the ACL.
Overall then, the effect of the Nicola decision is to enhance the status of foreign exclusive jurisdiction clauses in Australian law. First, the juridical advantage argument is now placed under tighter rein with plaintiffs required to show by clear and compelling evidence of foreign law that Australian statutory rights will not be justiciable in the foreign court. Secondly, the court showed a clear reluctance to expand the range of statutory provisions which invalidate foreign jurisdiction clauses. Specifically, the provisions of the ACL will almost certainly not be applied to override such clauses. Such an approach is not only consistent with that taken in cases involving enforcement of international arbitration agreements[75] but is welcome as it precludes plaintiffs from circumventing foreign jurisdiction clauses by the simple expedient of pleading a breach of the ACL.
Unfortunately, the same positive sentiments cannot be expressed about the recent decision in Faxtech Pty Ltd v ITL Optronics Ltd[76] in which a stay of New South Wales proceedings was refused. While this case was found by the court to involve a foreign non-exclusive jurisdiction clause the court stated that it would have reached the same result even if it had found the clause to be exclusive. Interestingly also, there were proceedings pending in the foreign court the subject of the clause in respect of the same subject matter and parties,[77] a further factor which should perhaps have inclined the court to decline jurisdiction, at least if such foreign proceedings were brought first in time.[78]
Yet the court in Faxtech refused to order a stay for breach of the ACL where the English proceedings did not or could not encompass the relief under Australian law which ‘can only be dealt with in this court’.[79] It is not clear from the judgment how this conclusion was reached—whether by expert evidence of foreign law or by agreement of the parties. But, as argued above, such a concern should in any event be irrelevant in a proceeding between commercial entities. If such parties have freely chosen English law and jurisdiction in their contract then they should be considered to have waived their rights under Australian law. The fact that such relief cannot be granted by the English court may simply be the consequence of that contractual choice.
Finally, it is worth mentioning two cases already referred to above, where Australian courts refused to stay proceedings brought by individual ‘consumers’ against transnational corporations. In both such cases strong reliance was also placed on the fact that the plaintiff would lose its rights under Australian statute if a stay were granted—in one case s 52 of the TPA and the other the ICA--but given the disparity in economic position and bargaining power of the parties[80] such decisions properly stand in a separate category. In such cases plaintiffs are entitled to have the benefit of ‘protective Australian statutes’.[81]
Before leaving this topic, it is again worth considering the impact of the 2005 Hague Choice of Court Convention on any of the above situations. The first point to note is that the Convention only applies to business to business agreements, not agreements entered into between a consumer and a business with consumer defined as a ‘natural person acting primarily for personal, family or household purposes’.[82] Such a definition would exclude the Quinlan and Knight cases from the scope of the Convention and so the results in those cases would be unaltered. Note, however, that small businesses and individuals acting in the course of a business are not excluded from the scope of the Convention, even in the context of standard form, non-negotiated agreements.[83]
Where a business to business agreement exists, a foreign choice of court clause in such an agreement must be enforced[84] unless, relevantly, (a) it is invalid under the law of the state of the chosen court or (c) to do so would lead to a manifest injustice or would be manifestly contrary to the public policy of the forum.
It is not clear whether invalidity under a mandatory statute of the enforcing court may fall within the scope of the public policy of the forum although the express reference in (a) to the law of the state of the chosen court on the question of validity perhaps suggests that such an argument was not intended to be available. The explanatory report[85] notes further that the public policy defence ‘is intended to set a high threshold. It refers to basic norms or principles of [the forum]; it does not permit the court seised to hear the case because the chosen court might violate, in some technical way, a mandatory rule of the State of the court seised’. Further, the report notes, the public policy exception does not permit a court to disregard a jurisdiction clause ‘simply because it would not be binding under domestic law.’ It is not clear whether the effect of this language is to exclude the operation of all mandatory laws of the forum—for example rules which invalidate a foreign jurisdiction clause. Would this situation be a mere ‘technical’ violation or would it be regarded as so fundamentally part of the ‘basic norms or principles’ of the forum that it must be respected? If public policy is not available to deny enforcement in this context, then the operation of Australian invalidating legislative provisions referred to above such as ss 8 and 52 of the ICA would be curtailed,[86] at least in the context of foreign jurisdiction clauses in business to business agreements.
Another unresolved question is whether the ‘juridical advantage’ type argument, successful in cases such as Akai and Faxtech and restricted in scope but still accepted as viable in cases such as Nicola and Yperion, would also survive implementation of the Hague Convention in Australian law. Specifically, the question is whether a loss of rights under Australian statute arising from enforcement of a foreign jurisdiction clause would amount to a ‘manifest violation of public policy’. While again the position is not certain, an Australian court may well be tempted to conclude, in line with the existing law, that such a situation would violate the ‘basic norms or principles’ of the forum state and so not enforce the clause.
The defence of ‘manifest injustice’ in art 6(c )is also relevant here, although again the explanatory report[87] emphasises that the standard for satisfaction of this defence is ‘intended to be high’ and would not permit a court to disregard a foreign jurisdiction clause ‘simply because it would not be binding under domestic law’. The report suggests that the defence ‘could cover the exceptional case where one of the parties would not get a fair trial in the foreign state, perhaps because of bias or corruption’. Nevertheless, two leading commentators have admitted that ‘substantive injustice’, such as when ‘the court seised might object to the content of specific provisions of the law that the chosen court would apply’, may fall within the injustice or public policy exceptions.[88] Such a view would clearly embrace the situation where an Australian plaintiff, as a consequence of enforcement of a foreign jurisdiction clause, would suffer a loss of rights under Australian statute due to the application of foreign law. If this view is adopted by Australian courts, the juridical advantage defence would remain available in cases under the Convention.[89]
Enforcement of foreign non-exclusive jurisdiction clauses
Two final groups of cases should be considered. The first concerns proceedings brought in Australia in breach of a foreign non-exclusive jurisdiction clause. The Faxtech[90] case discussed above, where a stay of Australian proceedings was refused, can also be considered in this context remembering that it was that the court’s primary conclusion that the clause in that case was non-exclusive. In two other decisions involving such clauses, orders for stays of proceedings were also both denied with the non-exclusive clause being considered merely one element in determining whether an Australian court was a ‘clearly inappropriate forum’ for trial under the principle in Voth v Manildra Flour Mills Pty Ltd.[91] Significantly, the Huddart Parker test which requires a plaintiff to show ‘strong reasons’ why an foreign exclusive jurisdiction clause should not be enforced, does not apply to an application to stay proceedings based on a foreign non-exclusive clause. Since the Voth test is notoriously difficult for defendants to satisfy—they have to show in effect that they would suffer vexation or oppression if the Australian proceedings continued[92]—the presence of a foreign non-exclusive jurisdiction clause is unlikely, in the absence of other compelling connections with the foreign country in question, to have much significance.
Australian courts consider, therefore, that the inclusion of a foreign non-exclusive clause shows that ‘the parties in fact accepted the possibility, as a real possibility that litigation might occur elsewhere [that is, in a place other than the country stipulated by the clause].’[93] The fact that the parties also chose the law of the stipulated country to govern their contract does not appear to affect this outcome, at least where such law also belongs to the common law system as is the case with Singapore[94] and Malaysia[95].
If Australia were to implement the Hague Convention on Choice of Court Agreements, the common law position in respect of non-exclusive jurisdiction clauses would remain unchanged since the Convention does not apply to such clauses.[96]
Enforcement of forum exclusive jurisdiction clauses
The second group of cases concerns forum exclusive jurisdiction clauses or prorogation agreements in which the parties have chosen to litigate in an Australian court. In two recent decisions Australian courts had no hesitation in enforcing such a clause.
In Alstom Ltd v Sirakas,[97] enforcement was achieved by refusing to stay Australian court proceedings, on the basis that a forum exclusive jurisdiction clause was ‘an acknowledgment by the parties that even though the dispute might arise from events in [a foreign country], they conducted their relationship on the basis that the balance of convenience favoured the dispute being resolved in this jurisdiction.’[98] Such a result would also be achieved under the Hague Convention if it were implemented in Australia although it seems that, unlike the common law position, the court would have no discretion at all to decline jurisdiction on grounds of convenience.[99]
To similar effect is Ace Insurance Ltd v Moose Enterprise Pty Ltd[100] where a court granted an anti-suit injunction to restrain proceedings brought in California in breach of a New South Wales exclusive jurisdiction clause. In that case the grant of the injunction was straightforward as ‘no discretionary basis for declining injunctive relief was advanced’.[101] Presumably the person opposing the injunction would need to show ‘strong reasons’ to prevent it being granted in the same manner as a plaintiff seeking to resist enforcement of a foreign exclusive jurisdiction clause on a stay application.
The scope for Australian courts to grant anti-suit relief to enforce forum exclusive jurisdiction clauses is also unlikely to be affected by Australia’s implementation of the Hague Convention. Article 7 provides that ‘this Convention neither requires nor precludes the grant, refusal or termination of interim measures of protection by a court of a contracting state and does not affect whether or not a party may request or a court should grant, refuse or terminate such measures’. Since it is well accepted that anti-suit injunctions are ‘interim measures of protection’, it would seem open to an Australian court to grant such relief to enforce a forum exclusive jurisdiction clause.[102]
It is likely, therefore, that similar outcomes will be reached by Australian courts in cases involving forum exclusive jurisdiction clauses under the Convention as at common law.[103]
Enforcement of forum non-exclusive jurisdiction clauses
A non-exclusive jurisdiction clause stipulating the courts of an Australian State or Territory is often included in a loan contract drafted by an Australian bank with a foreign borrower. The inclusion of such a clause has two main advantages from the bank’s point of view. First, if the bank chooses to sue the borrower in the stipulated Australian court then all Australian rules of court will allow it to serve the borrower outside Australia on the basis that that party has submitted to the nominated jurisdiction through acceptance of the jurisdiction clause.[104] The presence of such a clause will also act as a strong factor in the bank resisting any application by the borrower to stay Australian proceedings on the ground that the Australian court is a clearly inappropriate forum.[105]
The second advantage of a forum non-exclusive jurisdiction clause from an Australian bank’s point of view, is that if it chooses to sue the borrower in the defendant’s home jurisdiction, then an Australian court would be less likely to issue an anti-suit injunction to restrain such a proceeding, in contrast with the position with a forum exclusive jurisdiction clause.[106]
IV. Issue estoppel and jurisdiction clauses
In the Armacel decision discussed above[107] the court also made the important finding that the doctrine of issue estoppel applies to the interpretation and enforcement of jurisdiction clauses. In Armacel proceedings were brought in a US federal district court for a negative declaration which Armacel sought to stay, relying on a NSW jurisdiction clause. The US court found the clause to be non-exclusive and refused a stay. When proceedings were subsequently commenced in the Federal Court of Australia between the same parties in respect of the same subject matter, Jacobson J found that Armacel was bound by the US court’s construction of the clause and estopped from contending in the Australian proceedings that it was exclusive.[108] This conclusion was reached notwithstanding the fact that the US court had applied its own law to the question of interpretation rather than NSW law as the governing law of the contract.[109]
V. Damages for breach of a foreign exclusive jurisdiction clause
In a series of English decisions over the past decade it has been accepted that in certain circumstances a party may have a right to sue for damages for breach of an exclusive jurisdiction clause. Relevantly for Australian lawyers such a view seems to have been endorsed by Mandie J of the Supreme Court of Victoria in Commonwealth Bank v White (No. 2).[110] The White case, it will be recalled, involved an English corporation seeking to stay proceedings brought in Victoria in breach of an English exclusive jurisdiction clause. Mandie J noted that ‘it is at least arguable’ that if the defendant succeeded in its defence on the merits before the Victorian court then ‘it might have a claim for damages for breach of contract notwithstanding that ... this court refused to stay the ... proceeding on a number of occasions when the defendant so applied.’[111]
Such an observation may give some heart to foreign defendants who despite failing to have the Australian proceedings stayed, could nevertheless seek to recover the costs of being forced to litigate in Australia where such costs are shown to have exceeded what would have arisen in proceedings in the foreign court.
This last point may have particular pertinence to a US party which seeks to rely on an exclusive jurisdiction clause stipulating the courts of a US state whose laws do not follow the party-party costs rule but require each party to pay its own costs regardless of outcome. In such a case it is conceivable that if the US party were forced to sue in Australia and lost on the merits it would face a substantially higher costs bill than would have been the case had the matter proceeded in the chosen court, where the US defendant would at most have been liable only for its own costs.
The willingness of Australian courts to enforce jurisdiction clauses has definitely increased since the Akai decision in 1997. Courts are generally more mindful of the importance of these clauses in contractual planning and jurisdictional risk minimisation and so give them a wide interpretation to encompass as many claims as possible. Courts also have limited the range and scope of defences to enforcement. Such approaches would likely be continued were Australia to adopt the Hague Choice of Court Convention. By contrast and quite properly, courts have remained protective of Australian consumers and less willing to compel such parties to litigate abroad.
[1] (1996) 188 CLR 418
[2] Garnett R, “The Enforcement of Jurisdiction Clauses in Australia’ [2000] UNSWLawJl 51; (1998) 23 University of New South Wales Law Journal 1
[3] Williams v The Society of Lloyds [1994] VicRp 19; [1994] 1 VR 274; Leigh Mardon v PRC (1993) 94 FCR 88
[4] Bell A, Forum Shopping And Venue in Transnational Litigation (OUP 2003) paras 5.12, 5.104
[5] [2009] NSWSC 724
[6] Mortensen R, Garnett R and Keyes M, Private International Law (2nd ed Lexis Nexis 2011) para 4.5
[7] [2009] NSWSC 724 [15]
[8] Austrian Lloyd Steamship Co v Gresham Life Assurance Socy [1903] 1 KB 249
[9] [2009] NSWSC 724 [33]
[10] This has long been the common law position, see Briggs A, Agreements on Jurisdiction and Choice of Law (OUP 2008) para 4.11.
[11] Id., [36] – [37]
[12] [2008] FCA 592
[13] Id., [88]
[15] [1997] NSWSC 665
[16] [1999] NSWSC 931
[17] emphasis added
[18] [2011] FCA 1320
[19] Id., [11]
[20] [1994] 1 WLR 588
[21] Note that the Continental case is no longer good law in England after the European Court of Justice decision in Turner v Grovit [2004] 2 Lloyds Rep 169 in which it was held that, under the Brussels I Regulation, a court of an EU member state may not issue an anti-suit injunction to restrain proceedings in another member state. This conclusion however does not affect the status of the decision at common law, especially on the exclusive/non-exclusive interpretive issue.
[22] [2003] FCA 56 [343] – [346]
[23] [2006] VSC 401
[24] Id, [25]
[25] This may be incorrect as a matter of principle since the question is one of interpretation of an agreement and so should be governed by the proper law of the contract: see Bell, n 4 above, para 5.56; Garnett R, Substance and Procedure in Private International Law (Oxford University Press 2012) para 4.55. Interestingly, in Faxtech Pty Ltd v ITL Optronics Ltd [2011] FCA 1320 the court applied the proper law of the contract to determine whether the clause was exclusive ([5]) but then proceeded to disagree with the expert on foreign law and supply its own interpretation ([8] – [14]).
[26] [2006] FCAFC 192; (2006) 157 FCR 45
[27] The Kiukiang Career [1998] FCA 1485; (1998) 90 FCR 1
[28] Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; (2006) 157 FCR 45 [165]
[29] [2004] FCA 698; (2004) 138 FCR 496
[30] Id.,[32]. See also His Honour’s remarks in Heilbrunn v Lightwood Plc [2007] FCA 1518; (2007) 243 ALR 343 [29].
[31] [2010] NSWCA 196
[32] Id., [60]
[33] Id., [67]
[34] Id., [67]
[35] Id., [59]
[36] [2012] FCA 554. See also, most recently, Venter v Ilona MY Ltd [2012] NSWSC 1029 [30] – [31], [45] where a broad approach was taken to construction of a German exclusive jurisdiction clause to avoid duplication of proceedings.
[37] Id., [17]
[38] Id., [16]
[39] Laminex (Australia) Pty Ltd v Coe Manufacturing Company [1997] NSWSC 665
[40] [2008] SASC 75
[41] [2007] UKHL 40 [12] – [14] (Lord Hoffmann); [25] – [27] (Lord Hope); compare Rinehart v Welker [2012] NSWCA 95 where claims against a trustee for breach of trust and for orders varying the trust and removing the trustee were not found to ‘arise under’ a deed of settlement and so could not be submitted to arbitration.
[42] [2010] NSWCA 196 [79]
[44] [2012] FCA 554
[45] Id., [20]
[46] Garnett, n 2 above. See also Keyes M, Jurisdiction in International Litigation (Federation Press 2005) 97-99 and Bell (critical of convenience as a defence to enforcement), n 4 above, paras 5.81, 5.86.
[47] [1950] HCA 43; (1950) 81 CLR 502, 509
[48] See also Akai v The People’s Insurance Company (1996) 188 CLR 418, 445 (Toohey, Gaudron and Gummow JJ).
[49] Global Partners Fund Ltd v Babcock & Brown [2010] NSWCA 196
[50] Id., [84]
[51] Id., [91]
[52] Dance with Mr D Ltd v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332 [89]; Nicola v Ideal Image Development Corp [2009] FCA 1177; [2009] 261 ALR 1 [64]; Faxtech Pty Ltd v ITL Optronics Ltd [2011] FCA 1320 [23]
[53] Dance with Mr D Ltd [93]; McGuid v Office de Commercialisation et D’Exportation [1999] NSWSC 931 [94], [99] – [101]
[54] Incitec Ltd v Alkimos Shipping Corporation [2004] FCA 698; (2004) 138 FCR 496 [31]
[55] Keyes, n 46 above, 98-99
[56] [1999] NSWSC 861 [38] – [40]
[57] Note that the court also found that the plaintiff was not bound by the clause in any event [26] – [28].
[58] [2005] FCA 1362
[59] [2004] FCA 698; (2004) 138 FCR 496
[60] Id., [62]
[61] Brand R and Herrup P, The 2005 Hague Convention on Choice of Court Agreements Commentary and Documents (CUP 2008) 92; Thiele C, ‘The Hague Convention on Choice of Court Agreements: Was it Worth the Effort?’ in Gottschalk E, Michaels R, Ruhl G and von Hein J (eds), Conflict of Laws in a Globalised World (2007) 63, 75; Hartley T and Dogauchi M, Explanatory Report on the Convention of 30 June 2005 on Choice of Court Agreements (2007) [132], [134] 44 (made in the context of art 5 but seemingly equally applicable to art 6)
[62] Explanatory Report, id., [143] 46
[63] Laminex (Australia) Pty Ltd v Coe Manufacturing Company [1997] NSWSC 665; Leigh Mardon v PRC (1993) 94 FCR 88
[64] [1999] VSC 262; [1999] 2 VR 681 (aff’d [2004] VSCA 101)
[65] Id., [91]
[67] Davies M, Bell A and Brereton P, Nygh’s Conflict of Laws in Australia (8th ed 2010) para 7.47
[68] [2009] FCA 1177; (2009) 261 ALR 1 (Federal Court, Perram J)
[69] Id., [75]
[70] Yperion Technology SAS v Luminex Pty Ltd [2012] FCA 554 [20]
[71] See eg Leigh Mardon v PRC (1993) 94 FCR 88, Commonwealth Bank v White [1999] VSC 262; [1999] 2 VR 681 (aff’d [2004] VSCA 101) and Clough Engineering Ltd v Oil and Natural Gas Corp [2007] FCA 881 [41].
[72] See, for two recent examples of the application of this provision in the context of jurisdiction clauses, Puccini Festival Aust Pty Ltd v Nippon Express (Aust) Pty Ltd [2007] VSC 288; (2007) 17 VR 36 [57] and Ichibon v China Shipping [2011] NSWCTT 153 [18] – [19].
[73] Nicola v Ideal Image Development Corporation [2009] FCA 1177; (2009) 261 ALR 1 [72] (Federal Court, Perram J); see now ss 67 and 64 of the ACL.
[74] Compare Clough Engineering Ltd v Oil and Natural Gas Corp [2007] FCA 881 [41] where such a strategy by the plaintiff appears to have been successful.
[75] Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; (2006) 157 FCR 45
[76] [2011] FCA 1320
[77] Id., [19]
[78] Compare Henry v Henry [1996] HCA 51; (1996) 185 CLR 571.
[79] [2011] FCA 1320 [18]
[80] Knight v Adventure Associates [1999] NSWSC 861 [41]
[81] Quinlan v Safe International Försäkrings AB [2005] FCA 1362 [49]
[82] Art 2(1)
[83] Spigelman J, ‘The Hague Choice of Court Convention and International Commercial Litigation’ (2009) 83 Australian Law Journal 386, 391
[84] Art 6
[85] Explanatory Report, n 61 above, [153] 48
[86] Sections 64 and 67 of the ACL might also be affected depending upon whether the contract which includes the jurisdiction clause falls within the scope of the Convention (as a business to business agreement) or not. The complication here is that the definition of ‘consumer’ in s 3 of the ACL is expressed in arguably broader terms than under the Convention. Note that the operation of s 11(2) of the COGSA would be unaffected by the Convention because under art 2(2)(f) carriage of goods is excluded from its scope.
[87] Explanatory Report, n 61 above, [152] 48
[88] Brand and Herrup, n 61 above, 93
[89] Garnett R, “The Hague Choice of Court Convention: Magnum Opus or Much Ado about Nothing?” (2009) 5 Journal of Private International Law 161,167
[90] Faxtech Pty Ltd v ITL Optronics Ltd [2011] FCA 1320
[91] [1990] HCA 55; (1990) 171 CLR 538
[92] Puttick v Tenon Ltd [2008] HCA 54; (2008) 238 CLR 265
[93] Bagsfirst Global v Global Brands (Football) [2010] NSWSC 988 [24]
[94] Id., [26]
[95] Autotrop Sdn Bhd v Powercrank Batteries Pty Ltd [2006] VSC 401
[96] Hague Choice of Court Convention arts 1(1), 3
[97] [2010] NSWSC 669
[98] Id., [52]
[99] Hague Choice of Court Convention art 5(2)
[100] [2009] NSWSC 724
[101] Id., [40]
[102] Explanatory Report n 61 above, [160] 49; Joseph D, Jurisdiction and Arbitration Agreements and their Enforcement (2nd ed Sweet and Maxwell 2010) paras 10.45, 12.87
[103] Keyes M, ‘Jurisdiction under the Hague Choice of Courts Convention: Its Likely Impact on Australian Practice’ (2009) 5 Journal of Private International Law 181, 206
[104] See, for example, Uniform Civil Procedure Rules 2005 (NSW) r 11.2 Sch 6(h).
[105] See, for example, Eurogold Ltd v Oxus Holdings (Malta) Ltd [2007] FCA 811 [61] and HIH Casualty and General Insurance Ltd v Meadows Indemnity Co Ltd (1998) 47 NSWLR 85, 101.
[106] See discussion at III.D above.
[107] Armacel Pty Ltd v Smurfit Stone Container Corporation [2008] FCA 592
[108] Id.,[66]. The requirements for an issue estoppel are first, that the same question has been decided in the earlier proceeding, second, the decision was final and third, that it was given in proceedings between the same parties or privies: Carl Zeiss Stiftung v Rayner & Keeler Ltd (No. 2) [1967] 1 AC 853, 935.
[109] Id., [78]
[110] [2004] VSC 268
[111] Id., [5]
URL: http://www.austlii.edu.au/au/journals/UMelbLRS/2013/6.html