Sometimes foreign parties agree jurisdiction or applicable law agreements in favour of the Courts or the law of the “United Kingdom” or of “Great Britain”. Such an agreement presents unique interpretive issues because the United Kingdom is composed of three distinct legal systems (England and Wales, Scotland and Northern Ireland) and there are no ‘Courts of the United Kingdom’ as such. In a recent decision, Country Gold LP v Farm Investments Corporation SA, the Commercial Court has provided some helpful guidance as to the proper approach to the construction of such agreements.
Country Gold LP (‘Country Gold’) issued a claim in the Commercial Court against Farm Investments Corporation SA (‘Farm’),for sums due under a loan agreement. The loan agreement, which was headed “London, The UK of Great Britain”, included a jurisdiction clause in favour of the “appropriate court institutions of Great Britain” and provided for the governing law to be that of “the Great Britain”.
Farm did not file an acknowledgment of service and Country Gold therefore applied for default judgment. On 16th July 2021 Sir Nigel Teare, sitting in the Commercial Court, granted Country Gold’s application for default judgment.
Jurisdiction clause in favour of courts of Great Britain
One of the issues in the application was the meaning and effect of the aforementioned jurisdiction clause. This was relevant because, to obtain default judgment, Country Gold had to establish (amongst other things) that the English Court had jurisdiction, in order to satisfy the requirements (under paragraph 4.3 of the Practice Direction to CPR Part 12[1]) that the claim was one that the court had the power to decide and that no other court had exclusive jurisdiction under the 2005 Hague Convention, the Lugano Convention or the Judgments Regulation.
In paragraph 12.18 of Civil Jurisdiction and Judgments (7th edition), Professor Briggs provides guidance as to the correct approach where the parties adopt a jurisdiction agreement for the ‘courts of the United Kingdom’. His preferred approach starts from the position that Article 25 of the Judgments Regulation (or Article 23 of the Lugano Convention) requires that the agreement be taken at face value, such that the parties are entitled, so far as the Regulation or Convention is concerned, to bring a claim within each of the jurisdictions within the United Kingdom. The alternative approach would involve engaging in a detailed construction of the jurisdiction agreement pursuant to the applicable law to determine what the parties must have intended by “United Kingdom”.
In what appears to be the first judicial consideration of this guidance, the Court approved the preferred approach of Professor Briggs, holding that, in the case of a jurisdiction clause providing for the courts of Great Britain, the parties would be entitled to sue in any jurisdiction within Great Britain. That included, at least, the Courts of England and Wales.
The judge also considered on an obiter basis Professor Briggs’ alternative approach of interpreting jurisdiction by reference to the relevant governing law (which law was to be determined by English common law since jurisdiction agreements are excluded from the scope of the Rome I Regulation). The Judge started by considering what the applicable law was. The Judge concluded that English law was applicable. Amongst a number of factors, the Judge considered the most significant was that the loan agreement was headed “London, The UK of Great Britain”, which was an indication that the law applicable in London, i.e. English law, was the law intended to govern the loan agreement.
In both scenarios, the Court considered that it had jurisdiction and no other court had exclusive jurisdiction. Country Gold was thus entitled to default judgment.
The decision appears to be the first instance of Professor Briggs’ guidance being given judicial consideration and provides welcome clarification to the appropriate approach when jurisdiction clauses are in favour of Great Britain or the United Kingdom. The guidance will be of particular relevance, following Brexit, should the United Kingdom eventually accede to the Lugano Convention.
Jon Felce and Anastasia Tropsha of PCB Byrne LLP represented Country Gold, instructing Edward Gilmore of Twenty Essex.
[1] The pre-Brexit version of which remained relevant because the claim had been served out of the jurisdiction without the Court’s permission under the Judgments Regulation prior to the end of the transition period on 31 December 2020