Court of Appeal decision highlights dangers of choosing non-exclusive jurisdiction clause in favour of an EU court

The Court of Appeal has held that the English court had no power under article 33 of the recast Brussels Regulation to stay in favour of prior proceedings commenced in New Jersey, where the English court had jurisdiction under a non-exclusive jurisdiction clause. It made no difference that, absent the clause, the court would have had jurisdiction based on the defendant's domicile: Perform Content Services Ltd v Ness Global Services Ltd [2021] EWCA Civ 981.

The recast Brussels Regulation applies in the UK post-Brexit only where proceedings were commenced before 1 January 2021, so this decision will have limited application before the English courts. The importance of the decision lies in its implications for non-exclusive jurisdiction clauses in favour of EU member state courts. The Regulation of course continues to be applied by those courts, and so a party may ask an EU court to exercise its discretion under article 33 to stay its proceedings in favour of prior proceedings in England as a "third State" (ie a non-EU country).

If the English court's approach in this case is followed in the EU, it means that if there is a non-exclusive jurisdiction clause in favour of an EU court and proceedings are commenced first in England, the EU court will have no power to stay its proceedings in favour of the (prior) English proceedings. This is so regardless of whether England is a more appropriate jurisdiction in which to decide the dispute, and regardless of the fact that commencing proceedings in the English court was not a breach of the jurisdiction clause.

A party choosing a non-exclusive jurisdiction clause will likely do so thinking this will merely allow the parties to sue in the named jurisdiction, as one of a number of alternative potential forums for the dispute. The approach in this case means, however, that where the non-exclusive clause is in favour of an EU court, a party cannot pursue proceedings in a non-EU court, including the English court, without taking on the risk of parallel proceedings and inconsistent judgments – since if proceedings are later started in the named court, that court will, it seems, be bound to accept jurisdiction over the dispute. Parties should take this into account when choosing a jurisdiction clause.

Background

The case concerned a dispute between two English domiciled companies, Ness and Perform, over an offshore software development centre in Slovakia. The operation of the centre was the subject of a contract (the "DCA") which contained an English non-exclusive jurisdiction clause.

In March 2020 Perform began proceedings in New Jersey against Ness (and its parent guarantor, Ness Inc), claiming it was entitled to terminate the DCA. Ness then commenced English proceedings in April 2020 against Perform, seeking declaratory relief and payment of outstanding invoices.

Perform sought a stay of the English proceedings under article 33(1) of the recast Brussels Regulation which provides:

"Where jurisdiction is based on Article 4 or on Articles 7, 8 or 9 and proceedings are pending before a court of a third State at the time when a court in a Member State is seised of an action involving the same cause of action and between the same parties as the proceedings in the court of the third State, the court of the Member State may stay the proceedings if:

• It is expected that the court of the third State will give a judgment capable of recognition and, where applicable, of enforcement in that Member State; and
• The court of the Member State is satisfied that a stay is necessary for the proper administration of justice."

Perform argued that the English court had the power to stay its proceedings under article 33 as the English court had jurisdiction against Ness based on article 4 (domicile). As regards the jurisdiction given to the court under the non-exclusive jurisdiction clause (pursuant to article 25), it argued that this merely ranked alongside and enjoyed parity of status with jurisdiction based on domicile.

The High Court rejected this argument and also held that even if there had been a discretion to stay under article 33, it would have declined to order a stay. Perform appealed.

Decision

The Court of Appeal (the Chancellor giving the judgment of the court, with which Henderson and Nicola Davies LJJ agreed) dismissed the appeal.

Article 33 applied only where the court's jurisdiction was founded on domicile under article 4, or the rules of special jurisdiction under articles 7, 8 and 9 (which allow a party to be sued eg in the place of performance of a relevant contractual obligation). Where article 25 applied, article 33 had no application (approving the decision in UCP v Nectrus [2018] EWHC 380, see our post on that decision here).

Article 25 provided for mandatory jurisdiction and applied where there was an exclusive or non-exclusive jurisdiction clause in favour of a court. It made no difference that, absent the clause, the court would have had jurisdiction based on the defendant's domicile under article 4. The English court's jurisdiction in this case was "based on" the jurisdiction clause, not on domicile.

In any event, even if article 33 had applied, the judge did not err in the exercise of his discretion in refusing a stay.