Euromark Ltd v Smash Enterprises Pty Ltd

Where parties have agreed an exclusive foreign jurisdiction clause, the English court will ordinarily enforce it. The party seeking to litigate in England bears the burden of showing strong reasons.

Foreseeable convenience factors, the apparent strength of the claim, alleged repudiation, possible additional proceedings, and ordinary litigation disadvantage will not generally suffice. Relevant exceptional circumstances may include an unforeseeable matter or a real risk that the chosen court will not afford a fair or reliable trial. A repudiation claim remains a contractual dispute within the scope of the jurisdiction clause unless the agreement provides otherwise.

The claimant, an English distributor, sought to continue proceedings in England concerning the defendant’s alleged repudiation of a distribution agreement. The agreement was governed by Australian law and contained an exclusive jurisdiction clause in favour of the Australian courts.

The defendant applied under CPR 11(1) for a declaration that the court lacked jurisdiction and for discharge of an order permitting service of the claim form out of the jurisdiction. The jurisdictional gateway and reasonable-prospect requirements were accepted. The issue was whether there were strong reasons not to enforce the exclusive jurisdiction clause.

1. The defendant’s application was granted. The claimant obtained the declaration sought, and the order of Master Yoxall dated 7 February 2013 permitting service out of the jurisdiction was discharged.
2. The governing approach was the strong-reasons test stated in Donohue v Armco Inc [2001] UKHL 54. Where parties have submitted disputes within the scope of an exclusive jurisdiction clause to a foreign court, the English court will ordinarily enforce that bargain. The burden lies on the party suing elsewhere.
3. Foreseeable questions of convenience are irrelevant. The claimant must identify a factor which could not, or ought not, to have been foreseen when the contract was made. A standard forum-conveniens balancing exercise is inappropriate.
4. The expression “interests of justice” does not invite a broad assessment of the parties’ competing merits. In this context it addresses exceptional cases in which the chosen court may not afford a fair trial or may otherwise be unreliable or unjust. The claimant’s apparently strong case on liability therefore carried little, if any, weight.
5. A claim based on repudiation is a species of contractual claim. It falls within a jurisdiction clause covering disputes arising from the parties’ contractual relationship, and the possibility of breach or repudiation is ordinarily foreseeable. Repudiation does not tear up or displace the jurisdiction agreement.
6. A possible need for proceedings involving retailers did not constitute a strong reason. Uncommenced additional claims and the prospect of litigation in different jurisdictions were foreseeable. Nor was there evidence that Australian proceedings would stifle the claim, impose materially greater expense, or deny a fair trial.
7. The defendant’s alleged tactical conduct and the relative location of witnesses and documents did not overcome the parties’ bargain. The Australian governing law and the defendant’s location provided countervailing considerations.