Knorr-Bremse Systems for Commercial Vehicles Ltd v Haldex Brake Products GmbH

A jurisdiction clause is governed by the autonomous law of the Judgments Regulation, rather than the national law governing the contract’s substantive provisions. Where a non-party is said to be bound without succession to a contracting party’s rights and obligations, the party relying on the clause must show clearly and precisely that the non-party consented to it in writing. A future challenge to patent validity may be sufficient to engage exclusive patent jurisdiction; formal pleading is not essential where it is clear that validity will be put in issue.

The claimant sought a declaration that its proposed valve did not infringe two European patents. The defendant applied for a stay, relying on a German settlement agreement between the defendant and the claimant’s German parent company. The agreement contained an exclusive jurisdiction clause and a non-challenge clause, but the claimant was not a signatory.

The issues were whether the claimant was bound by the agreement, whether the English court had exclusive jurisdiction because patent validity was to be challenged, and whether the non-challenge clause was enforceable.

1. Application dismissed. The settlement agreement did not contain a valid jurisdiction clause binding the claimant.
2. The concept of an agreement conferring jurisdiction is autonomous under the Judgments Regulation. Its purpose is to ensure legal certainty and enable the court seised to determine jurisdiction without deciding the substantive dispute. The existence of succession to a contracting party’s rights and obligations is determined by the national law governing the substantive contract. Where there is no succession, however, the court must determine whether the non-party actually accepted the jurisdiction clause by reference to the strict formal requirements of article 23.
3. The party relying on an exclusive foreign jurisdiction clause must demonstrate clearly and precisely that the formal requirements of article 23 are satisfied. The written agreement named only Haldex and KBS GmbH. There was no written agreement between Haldex and KBS UK, and the agreement’s wording, including its entire-agreement provision, was inconsistent with KBS UK being an additional party.
4. The court applied the good arguable case standard to the jurisdictional issues. The burden lay on Haldex because it relied on the alleged foreign jurisdiction agreement. Even if German law were relevant, Haldex did not have the better argument that KBS UK was bound.
5. As an alternative issue, validity had been raised although no formal invalidity claim had yet been pleaded. Following the approach in Coin Controls Ltd v Suzo International (UK) Ltd, as approved in Fort Dodge Animal Health Ltd v Akzo Nobel NV, it was unnecessary for invalidity to be formally pleaded where it was clear that validity was to be put in issue. The English court would therefore have exclusive jurisdiction over the validity issue under article 22, unless the non-challenge clause applied.
6. The non-challenge clause did not bind KBS UK because the settlement agreement did not bind it. The judge also considered that KBS UK had a good arguable case that the clause contravened article 81 EC, but that issue was not finally determined.

First-instance decision. No prior appellate decision is stated in the judgment.