Asymmetric jurisdiction clauses

An asymmetric or unilateral jurisdiction clause is one that requires one party to bring proceedings in a specific court while permitting the counterparty (usually a financial institution) to commence proceedings in that court or in any other competent court.

Asymmetric jurisdiction clauses are most commonly found in finance, including trade and ship finance, documentation, including guarantees. The purpose of such clauses is to prevent borrowing parties from seeking to frustrate a loan or other facility agreement by bringing suit in an unfavourable jurisdiction that might, for example, lead to inefficient and slow court proceedings or subsequent difficulties in enforcing a judgment.

However, such clauses can also be found in other types of commercial contract. In February 2025, the CJEU addressed the scope and effect of an asymmetric jurisdiction clause in a sale of goods contract. The CJEU upheld the clause in question, emphasising the importance of party autonomy in agreeing to such clauses.

Different jurisdictions take varying attitudes to the validity of asymmetric jurisdiction clauses because they are by their very nature unequal in terms of allowing the parties to choose where to bring suit. Under English law, however, they are in principle valid and enforceable.

English law position

Pre-Brexit, when the Brussels I Regulation (Regulation) still applied in the UK, there was uncertainty as to whether asymmetric jurisdiction clauses were valid under the Regulation and conferred exclusive jurisdiction on the chosen court.

In 2017, the English Court addressed the issue directly in Commerzbank AG -v- Liquimar Tankers Management Inc [2017] EWHC 161 (Comm). In that case, a German bank had entered into ship finance agreements with a number of related ship-owning companies. One of the loans was guaranteed by a ship management company based in Greece. The guarantee was governed by English law and incorporated an asymmetric jurisdiction clause “for the exclusive benefit” of the lender that compelled the guarantor to commence any proceedings in the English courts. The underlying loan agreements incorporated a similar provision.

Subsequently, the guarantor commenced Greek court proceedings against the bank. The bank then commenced English court proceedings, seeking a declaration of non-liability. The guarantor argued that an asymmetric jurisdiction clause did not qualify as exclusive under the Regulation and the English Court should stay its proceedings pending a decision by the Greek courts, as the courts first seised of the action, on their own jurisdiction. The English Commercial Court held that an asymmetric jurisdiction clause was both valid and enforceable, as well as exclusive, under the Regulation. 

The Regulation no longer applies in the UK and the Hague Convention on Choice of Court Agreements 2005 does not apply to non-exclusive jurisdiction clauses. Asymmetric jurisdiction clauses are likely not going to be considered exclusive for the purposes of the 2005 Convention. 

Non-exclusive and asymmetric jurisdiction clauses are, however, within the scope of the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters 2019, which the UK ratified in June 2024, and which will enter into force in the UK on 1 July 2025. However, the 2019 Convention will only apply between its ratifying parties.

The English Court nonetheless continues to treat an asymmetric jurisdiction clause as exclusive where it considers that that is the true scope and effect of the relevant clause. It will also order anti-suit relief where appropriate.

In Barclays Bank -v- PJSC Sovcombank & another [2025] EWHC 1338 (Comm), Barclays alleged that it was prevented from making certain payments under a facility agreement to the defendant Russian bank because of UK sanctions. The Russian bank commenced Russian court proceedings, claiming damages for Barclays’ failure to pay. Barclays argued that the terms of the facility agreement obliged the Russian bank to only commence proceedings in the English Court and that this was an exclusive jurisdiction agreement.

The English Court agreed and granted an anti-suit injunction and an anti-enforcement injunction in relation to the Russian proceedings.

CJEU ruling

In Societa Italiana Lastre SpA (SIL) -v- Agora SARL C-537/2023, Agora had entered into a contract with SIL for the supply of panelling. The contract provided for the jurisdiction of the Court of Brescia, Italy but SIL, as the supplier, had the right to commence proceedings against Agora, as the purchaser, elsewhere.

The panelling was destined for a project but when defects were found in the execution of the project, the project owners sued both Agora and SIL in a French regional court. Agora made a claim in the French Court against SIL under a guarantee. SIL relied on the asymmetric jurisdiction clause to argue that the French Court did not have jurisdiction. The French Court rejected this argument. On appeal, it was held that the asymmetric jurisdiction clause was invalid. The issue was in due course referred to the CJEU.

The CJEU upheld the validity of the asymmetric jurisdiction clause, finding that such clauses were valid under the Regulation so long as the unilateral element of the clause conferred jurisdiction on an EU or Lugano Convention state. EU law could not, however, confer jurisdiction on a third-party country’s courts because that would be a matter for their own domestic law and private international law rules.

Comment

The English courts’ policy of upholding asymmetric jurisdiction clauses and deeming them to be exclusive is encouraging for financial institutions and others who may wish to rely on them. Nonetheless, uncertainties may arise from the divergence between English and EU or other foreign domestic laws. 

For example, if a borrower brings proceedings in an EU court in breach of an asymmetric jurisdiction clause requiring it to commence English court proceedings, the EU court will proceed to decide on its own jurisdiction, rather than simply stay its proceedings in favour of the English Court. If the EU Court then retains jurisdiction, this may lead to parallel proceedings and potential difficulties in enforcing any subsequent English court judgment in an EU member state.