Absence of a Jurisdiction Clause

An interesting case has appeared which shows just why you need to ensure that your agreements contain jurisdiction clauses. Â

The two companies ‘Pablo Star’ and ‘Dubai’s Emirates Integrated Telecommunications Company’ (trading as ‘Du’) had an agreement under which Pablo Star would supply photo and video services for one year at a minimum level of $30,000.00 per month. For the first three months there were no problems and a total of $100,000.00 worth of work was both commissioned and paid for in full. However Du then said that it would not commission any further work, Pablo Star took this as a breach of contract and sued.

In the absence of an express contractual term both Pablo Star and Du claimed that their countries laws should apply and purported that agreements and email correspondance supported their respective views. The Court of Appeal held that there were no pre-contract negotiations that established either the jurisdiction or choice of law as that of Dubai, whilst it found that Pablo Star did produce terms identifying that the English courts would have jurisdiction these were not necessarily part of the contract itself. Â

Du stated in one email that: “vendors will be expected to contract on du terms and conditions as supplied in Appendix B”. However no appendix B was attached. According to the ruling: “The terms and conditions produced by Mr Ansari did not contain such a provision and thus it can be argued as it seems to me fairly conclusively that they simply cannot be the terms or conditions to which the note refers…They appear indeed not to be standard terms and conditions in the ordinary sense of that word they appear to be the terms of an ‘Information Technology Master Agreement’. It cannot be open to a party to a contract to refer to ‘its terms and conditions’ and then pull any terms and conditions out of the drawer which suits its purpose.” Du further tried to rely upon a statement in the footer of their emails: “without exception, du does not enter into agreements by exchange of emails and nothing in this mail shall be construed or interpreted as binding du or creating any obligation on behalf of du”. However the court determined that the email correspondance combined with the fact that three months worth of work had been carried out meant that this footer “seems to me not to be applicable,”. Â

Bearing in mind that no jurisdiction was agreed the Court applied the Rome Convention: “By Article 4(2) of the Rome Convention as enacted into English law by the Contracts (Applicable Law) Act 1990, there is a presumption in favour of the law of the place of business of the person who is to effect characteristic performance of a contract,” and therefore decided that the English Courts are entitled to take jurisdiction. That though was not all, the Court was somewhat scathing about the behaviour of the parties: “It is worrying indeed that a respectable company such as EITC faced with a claim for under £50,000, which they must appreciate has some merit even if not certain of success, should spend many thousands of pounds seeking to argue about where such a dispute should be resolved,”. Â

The simple way of avoiding the above is to include that all important jurisdiction and choice of law clause!

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