In a recent case the Court of Appeal has ruled that one jurisdictional clause set out in literally hundreds of pages of a complex commercial transaction cannot govern the whole agreement simply because a company acting in the normal course of trade would not expect this to be the case.
The case concerned UBS and HSH Nordbank who were in dispute about several jurisdictional clauses (which conflicted with one another) set out in the main agreement between them. HSH Nordbank sued UBS in an attempt to recover losses on a $500m it had invested on a portfolio of property investments in exchange of a return on the property investments. It alleged that there had been some misrepresentations which had induced HSH Nordbank to invest.
The deal documentation were in two parts, one part specified that disputes would be settled in English courts. All the other documents stated that New York courts would settle any disputes that arose.
What the UK Judges said:
“Whether a jurisdiction clause applies to a dispute is a question of construction,” said Lord Collins. “Where there are numerous jurisdiction agreements which may overlap, the parties must be presumed to be acting commercially, and not to intend that similar claims should be the subject of inconsistent jurisdiction clauses.”
“The only possible basis for the jurisdiction of the English court is the jurisdiction clause in one of the agreements in the Credit Default Obligations) transaction,” said Lord Collins. He said that the English jurisdiction clause was in “one of the documents recording the complex transaction between the parties (a 1-page document among 500 pages of other documents constituting the overall deal)”.
Lord Collins said that courts should look at a deal in the way that a commercial company would and reject non-commercial interpretations.