When will a court override an exclusive jurisdiction clause?

Background

Ms Jong entered into a contract with HSBC Private Bank (Monaco) SA (“HSBC Monaco”).  That contract contained an exclusive jurisdiction clause in favour of the Courts of Monaco.  Ms Jong claimed that HSBC Monaco (a) placed some trades which she had not authorised and (b) failed to place some trades which she had authorised, causing her to suffer loss.

Ms Jong commenced proceedings in the English courts against two HSBC entities which were domiciled in England and Wales for negligence (on the basis that they failed to adequately consider her complaints about HSBC (Monaco)).  Ms Jong wished to sue HSBC (Monaco) in the same proceedings.

The Decision

In determining whether to allow Ms Jong to proceed against HSBC (Monaco) in the English proceedings, the Court of Appeal considered that the following factors needed to be balanced:

1. In favour of overriding the exclusive jurisdiction clause:

1. The claims against the two English entities were governed by English law and there was a considerable factual overlap between the claim against them and the claim against HSBC (Monaco);
2. The claim against the two English entities required Ms Jong to prove against them the truth of the allegations she made about HSBC (Monaco).  If the claim against HSBC (Monaco) failed, so too must the claim against the English entities;
3. It was common ground that Ms Jong was entitled to proceed against the two English entities (even though they were willing to be sued in Monaco) on the basis that, pursuant to Article 2(1) of the Brussels Regulation (44/2001) they were to be sued in their country of domicile, and could not be prevented from doing so on the ground that another forum was more appropriate;
4. Hearing all claims in England would remove the risk of inconsistent judgments;
5. Hearing all claims in England would avoid the costs of parallel proceedings;
6. The contract with HSBC (Monaco) was made in England (in that Ms Jong signed it in England);
7. The contracts for the trades were made in England (in that Ms Jong was physically located in England when giving her instructions by telephone to HSBC (Monaco));
8. Ms Jong was resident in England and Wales

2. Against

1. The existence of the exclusive jurisdiction clause (i.e. HSBC (Monaco)’s contractual right to be sued in Monaco and nowhere else);
2. Ms Jong had chosen to open a bank account in Monaco and to conduct her foreign exchange dealings through that account;
3. The claim against HSBC (Monaco) was governed by Monagasque law;
4. Had the chosen jurisdiction in the exclusive jurisdiction clause been a member state (e.g. France), Article 23 of the Brussels Regulation (Art 25 in the Recast Brussels Regulation) would have prevailed over Article 2(1) – meaning that there was no room for the exercise of any discretion;
5. The two HSBC entities domiciled in England were content to be sued on Monaco.

The Court of Appeal made clear that the decision about jurisdiction was a holistic one which required consideration of a number of factors in the round and warned that previous authorities were not binding as to how the discretion was to be exercised; but rather examples of how, in similar circumstances, it would not be wrong to exercise discretion in the same way.  Ultimately, the Court decided that the Judge had taken into account the relevant considerations, did not take into account irrelevant ones and reached a decision that was within the bounds of reasonableness.

Commentary

The judgment is helpful in identifying the different factors that the Courts can take into account when determining whether or not to depart from an exclusive jurisdiction clause.  The Court made clear that an exclusive jurisdiction clause does not trump all other considerations, but rather is an important factor to weigh in the balance. 

Although the Court of Appeal upheld the Judge’s decision which had the effect of upholding the jurisdiction clause, it also recognised that a different judge could have considered the same factors and come to a different decision.