Key takeaways
Asymmetric clauses enforced
Borrowers restricted to one forum, lenders retain flexibility to sue elsewhere.
Parallel proceedings remain possible
Asymmetric clauses can lead to parallel litigation in multiple jurisdictions.
Contractual rights respected
English courts uphold party’s right to bring proceedings within contractually agreed jurisdictions.
Spec 1 Limited & others -v- The Export-Import Bank of China [2026] EWHC 1162 (Comm)
This recent decision relates to the effect of asymmetric jurisdiction clauses, which are frequently found in ship finance transactions. Asymmetric jurisdiction clauses typically require a borrower and lender to submit to the exclusive jurisdiction of a designated court and jurisdiction. However, the lender also reserves the right to sue the borrower in any other court of competent jurisdiction.
In this case, the Court upheld the borrowers’ contractual obligation, and indeed entitlement, to bring proceedings against the lender in the English Courts pursuant to the contractual asymmetric exclusive jurisdiction clause. The fact that the lender had chosen to bring proceedings in Singapore against the borrowers did not justify a stay of the English proceedings.
The commercial purpose behind these clauses is to allow a lender/creditor the flexibility to seek enforcement wherever a borrower’s assets are located. They are intended to minimise enforcement risk, thereby reducing the cost of the transaction to borrowers and encouraging lenders to provide finance.
As the Court in this case noted, asymmetric jurisdiction clauses are particularly important in the context of ship finance where often the borrowers’ main asset is a ship. In order to secure a claim under the finance agreement, the lender may have to arrest the ship and that requires the lender to commence admiralty proceedings at a suitable port of arrest. It is, therefore, vital for the lender to be able to sue wherever is needed based on the ship’s trading pattern.
The background facts
In 2015, ship finance arrangements were entered into by The Export-Import Bank of China, as Lender, with various companies, as the Original Borrowers, in relation to vessels that included vessels subsequently owned by Spec 1 Ltd and Spec 2 Ltd. Issues arose under those arrangements, and it was agreed that Spec 1 Ltd, Spec 2 Ltd and Spec 3 Ltd, would replace the Original Borrowers as Borrowers under the ship finance arrangements.
On 1 April 2024, the Lender and the Borrowers entered into a group of interlocking agreements, including the following: (1) an English law Novated, Amended and Restated Secured Loan Agreement (NAR Loan Agreement), between the Lender and all the Borrowers (contracting jointly and severally); (2) an English law Deed of Novation, Amendment and Restatement, between the Lender, all the Borrowers and all the Original Borrowers (NAR Deed); and (3) a Liberian Law First Preferred Liberian Mortgage related to the MV Spec Nichole (a vessel owned by Spec 3 Ltd), between the Lender and Spec 3 Ltd (Spec Nichole Mortgage).
Collectively, these documents and the other documents in the overall group were referred to as ‘the Finance Documents’. Within the Finance Documents was a sub-group referred to as ‘the Security Documents’, which included the Spec Nichole Mortgage.
The Security Documents, including the Spec Nichole Mortgage, stood as security in relation to the totality of the sums that might be due under the NAR Loan Agreement. Consequently, by the Spec Nichole Mortgage, Spec 3 Ltd was potentially liable, and the Spec Nichole could potentially be arrested, in respect of any sums that might be due by any or all of the Borrowers, jointly and severally, under the NAR Loan Agreement.
Issues arose under the Finance Documents and the Lender claimed that very substantial sums were due and outstanding.
Relevant jurisdictional provisions
NAR Loan Agreement: Clause 18 of the NAR Loan Agreement, the law and jurisdiction clause, provided in relevant part as follows:
“18.2 Jurisdiction For the exclusive benefit of the Lender, the parties to this Agreement irrevocably agree that the courts of England are to have exclusive jurisdiction to settle any dispute (a) arising from or in connection with this Agreement or (b) relating to any non-contractual obligations arising from or in connection with this Agreement and that any proceedings may be brought in those courts.
18.3 Alternative jurisdictions Nothing contained in this Clause 18 shall limit the right of the Lender to commence any proceedings against the Borrowers in any other court of competent jurisdiction nor shall the commencement of any proceedings against the Borrowers in one or more jurisdictions preclude the commencement of any proceedings in any other jurisdiction, whether concurrently or not.
18.4 Waiver of objections Each Borrower irrevocably waives any objection which it may now or in the future have to the laying of the venue of any proceedings in any court referred to in this Clause 18, and any claim that those proceedings have been brought in an inconvenient or inappropriate forum, and irrevocably agrees that a judgment in any proceedings commenced in any such court shall be conclusive and binding on it and may be enforced in the courts of any other jurisdiction.”
This was effectively an asymmetric jurisdiction clause. In broad terms, its intended effect was that the Borrowers, in general, could and must only sue the Lender in England; whereas the Lender could sue the Borrowers in England but, in general, could also sue elsewhere.
However, on the basis that the Lender had commenced proceedings outside England, the parties disagreed on whether this affected the Borrowers’ ability to sue in England and/or the Lender’s ability to object to the English jurisdiction. In contrast, if the Borrowers had commenced proceedings in England, whether this affected the Lender's ability to sue elsewhere, and/or the Borrowers' ability to object to all or any foreign jurisdictions.
It was common ground that, in some circumstances, Clause 18 permitted parallel proceedings in different jurisdictions. However, the parties disagreed as to what those circumstances were. The Lender contended that its ability to sue elsewhere was not affected by the commencement of proceedings in England, whether by it or by the Borrowers. The Borrowers contended that the Lender could only sue outside England before either of them had commenced proceedings in England, whereas the Borrowers' ability to sue in England was not affected by the Lender suing elsewhere.
Other jurisdictional provisions: The NAR Deed incorporated an identical law and jurisdiction clause. The Spec Nichole Mortgage was subject to Liberian law. It incorporated an asymmetric jurisdiction provision whereby the Lender (as Mortgagee) could sue Spec 3 in England but was not obliged to do so. By contrast, Spec 3 was not given any contractual right at all to sue the Lender in England or anywhere else. It had to establish jurisdiction by other non-contractual means.
Singapore proceedings
In May 2025, the Lender brought Admiralty proceedings in rem against Spec 3 Ltd as owner of the Spec Nichole (ADM 33). The vessel was arrested in Singapore, and the Lender’s claim was that all the Borrowers were in default under the NAR Loan Agreement. This meant that the entire loan had been accelerated, under the terms of the NAR Loan Agreement, so that the Borrowers were all jointly and severally liable for the full amount – all secured by the Spec Nichole Mortgage. Therefore, Spec 3 Ltd was said to be liable under the Spec Nichole Mortgage for a principal sum of over USD 61 million, plus interest.
Spec 3 Limited contended that all the Finance Documents should be rescinded due to the Lender’s fraudulent misrepresentation that led to Spec 3 Ltd entering into the agreements.
The vessel was sold pursuant to a judicial sale and the proceedings in Singapore continued. However, Spec 1 Ltd and Spec 2 Ltd could not be joined to the proceedings either as additional defendants or as counterclaimants.
English court proceedings
In July 2025, the Borrowers commenced English court proceedings against the Lender, seeking rescission of all the Finance Documents, reimbursement of all expenditure and losses incurred by all the Borrowers as a result of entering into the Finance Documents and damages resulting from the alleged misrepresentations. These claims were similar to those in Spec 3’s defence and counterclaim in ADM 33 but the English proceedings were brought by all the Borrowers jointly and severally and the financial remedies claimed were broader.
Further developments in Singapore
In October 2025, the Lender commenced proceedings in Singapore against Spec 1 and Spec 2 (but not Spec 3), seeking declarations that the NAR Loan Agreement and NAR Deed were valid and binding and had not been rescinded, as well as the USD 61 million outstanding principal plus interest (OC 847).
Spec 1 and Spec 2 entered appearances but did not file defences or challenge jurisdiction and OC 847 was stayed by agreement.
In August 2025, the Lender was unsuccessful in its application in ADM 33 for an anti-suit injunction against Spec 3 in respect of the English proceedings. The Singapore Court decided that the English proceedings were neither vexatious nor oppressive and that England rather than Singapore was the natural forum for resolving the dispute. That decision is being appealed.
It is estimated that the final hearing in ADM 33 will take place in or around February 2027, but it is not clear when judgment will be handed down. If OC 847 is consolidated with ADM 33, the consolidated proceedings would be likely to take place around May 2027.
Jurisdictional challenge in the English Court
The Lender applied to the English Court, requesting that it decline jurisdiction and stay its proceedings. The Lender did not contest that the English Court had jurisdiction in principle due to the jurisdictional provisions in the NAR Loan Agreement. However, the Lender argued that England was not the natural forum, and that a stay of the English proceedings would prevent duplicative proceedings and the risk of inconsistent decisions in England and Singapore.
The Borrowers contended that they had an absolute contractual right to bring their claims in England and Wales. They argued that the effect of the jurisdictional provisions in the NAR Loan Agreement was to preclude the continuation of the proceedings in Singapore which were brought in breach of contract and or were vexatious and/or oppressive.
The Lender disagreed, arguing that on their true construction, the jurisdictional provisions in the NAR Loan Agreement expressly permitted the Lender to bring proceedings in Singapore if it wished to do so.
The Borrowers sought an anti-suit injunction to restrain the OC 847 proceedings.
The Commercial Court decision
The Court reviewed the authorities on asymmetric jurisdiction clauses. It highlighted in particular the following propositions:
the prosecution of parallel proceedings in different jurisdictions is undesirable but not necessarily vexatious or oppressive.
parallel proceedings were a foreseeable consequence of an asymmetric jurisdiction clause.
by agreeing to submit to the non-exclusive jurisdiction of state X, the parties implicitly agree that X is an appropriate jurisdiction. Either party must show a strong reason for later arguing that it is not an appropriate jurisdiction.
on the other hand, a non-exclusive jurisdiction clause self-evidently leaves open the possibility that there may be another appropriate jurisdiction. The degree of appropriateness of an alternative jurisdiction must depend on all the circumstances of the case.
if proceedings are commenced in England as the designated jurisdiction, the English Court will not stay its proceedings without strong reasons.
Looking at the wording of clause 18, the Court stated as follows:
Clause 18.2 applied in principle to the Borrowers' claims in this action. They were claims that the Borrowers were contractually obliged to bring only in England; they could not have brought them anywhere else, including Singapore, because to do so would have been a breach of contract. The fact that there was a virtual (but not complete) overlap between the relief sought by Spec 3 in its counterclaim in ADM 33 and the relief sought by all the Borrowers in this action did not affect this.
conversely, the Borrowers were contractually entitled to bring their claims in England, and the Lender was obliged to acknowledge the Borrowers' right to invoke the jurisdiction of the English Court – as it had done.
the fact that the Lender was entitled to commence proceedings in other courts simply underlined that the terms of the NAR Loan Agreement unequivocally contemplated the possibility of parallel proceedings in more than one jurisdiction. It was something that was always foreseeable.
moreover, the fact that such parallel proceedings had now eventuated was not something that the Lender could rely on, not least because that was a result of the Lender’s own decision to commence proceedings outside England.
the Lender could have chosen to bring its claims in England, as the designated jurisdiction; in which case, it would have been able to ensure that its claims and any claims brought by the Borrowers were all brought in the same jurisdiction. Instead, the Lender chose to commence proceedings elsewhere. It was fully entitled to do so but had to accept the entirely foreseeable consequence of English proceedings and parallel proceedings.
The Court stated that the Borrowers contracted on a basis that meant they were entitled to bring proceedings in England, and they had every right to hold the Lender to this even though the Lender wished to enforce its own right to sue elsewhere. The fact that this might lead to inconsistent decisions was a feature of that bargain, but it was an entirely foreseeable risk that both parties must be taken to have accepted. The English Court should enable the parties to perform their bargain, rather than obliging them to deviate from it. If they had agreed to be bound by mutual promises that necessarily contemplated parallel proceedings in different jurisdictions, the Court should accept this.
In conclusion, the Lender had not identified strong reasons for a stay in circumstances where England was the designated and exclusive jurisdiction for any proceedings commenced by the Borrowers. However, the Court declined to grant an anti-suit injunction against the Lender in respect of OC 847. Singapore was a court of competent jurisdiction, within the meaning of clause 18.3. It was not, therefore, a breach of Clause 18 for the Lender to bring claims against Spec 1 and Spec 2 in Singapore, in OC 847.
Comment
The Court was critical of the parties’ determination to engage in a jurisdictional battle because, in the Court’s view, both jurisdictions were equally suitable for resolving the parties’ dispute. It did appear to encourage the parties to take a common sense and pragmatic approach in order to avoid duplicative proceedings and the risk of inconsistent decisions.
From an enforcement perspective, commencing simultaneous proceedings in both the English courts and the jurisdiction of arrest may have pre-empted a jurisdictional challenge by the Borrowers, especially if summary judgment in respect of acceleration and non-payment provisions under the loan agreement had been sought and obtained at the outset.
While asymmetric jurisdiction clauses remain a standard feature of English law finance documentation, particularly in traditional asset-based debt financing, Chinese financiers, especially Chinese leasing companies engaging in ship leases, are increasingly adopting the use of arbitration clauses in cross-border transactions (often seated in Hong Kong or Singapore).
This shift appears to be driven primarily by enforcement considerations. Arbitration awards continue to benefit from the global enforcement regime under the New York Convention, offering confidentiality and broader, more predictable enforceability in jurisdictions where Chinese lenders are active.
If you’d like to discuss the issues covered in this article further, please contact our Marine team.
