Etihad Airways PJSC v Flother

A widely worded jurisdiction clause may extend to a separate document where the documents form one closely connected commercial package, no competing jurisdiction clause applies, and disputes may foreseeably require determination by the same court. Under Brussels Recast, the particular legal relationship is identified from the facts and context as a whole. The court then asks whether the dispute originates from that relationship or a different one. Article 31(2) applies to an asymmetric clause where one party has undertaken to sue only in the chosen courts. Exclusivity is assessed by reference to that obligation; reciprocal exclusivity is unnecessary.

Air Berlin’s insolvency administrator applied for declaratory relief and a stay of proceedings brought by Etihad in England. Air Berlin had already commenced proceedings in Germany concerning a comfort letter in which Etihad stated its intention to continue supporting Air Berlin. Etihad relied on an exclusive, but asymmetric, English jurisdiction clause in a related facility agreement. The application raised the scope of that clause, the Article 25 requirement that disputes arise from a particular legal relationship, the effect of Article 31(2), and whether a reference to the Court of Justice was required.

The application was dismissed.

1. The applicable standard was whether Etihad had a good arguable case, meaning the better of the argument on the available material, that the English court had jurisdiction. The requirement that an Article 25 agreement be clearly and precisely demonstrated did not impose a more stringent test: Airbus SAS v Generali Italia SpA [2019] EWCA Civ 805; Bols Distilleries BV v Superior Yacht Services [2007] UKPC 45.
2. The facility agreement’s clause was extremely wide. Applying a broad, purposive and commercial construction, and the one-stop approach in Fiona Trust & Holding Corp v Privalov [2007] UKHL 40, the court considered the agreements as an overall support package. The Comfort Letter was closely connected with the facility agreement, was arguably non-binding and ancillary to it, and no competing jurisdiction clause applied to the relevant agreements. It was foreseeable that disputes under either document would require consideration of the other.
3. For Article 25, the court identified the legal relationship in connection with which the jurisdiction agreement was concluded and asked whether the dispute originated from that relationship or a different one. The enquiry was factual and contextual. It was not confined to the contractual label in the facility agreement or to the foreign claim’s legal characterisation. The wider shareholder-company relationship and the April 2017 support package were relevant. The dispute therefore arose from the particular legal relationship required by Article 25: Powell Duffryn plc v Petereit C-214/89; Hydrogen Peroxide SA v Akzo Nobel NV C-352/13.
4. Article 31(2) applied to the asymmetric clause. Air Berlin had promised to bring proceedings only in England. That obligation conferred exclusive jurisdiction for the relevant group of disputes, even though Etihad could sue elsewhere. The court followed Commerzbank AG v Liquimar Tankers Management Inc [2017] EWHC 161 (Comm) and held that the English court was seised on the basis of the exclusive jurisdiction agreement. A reference to the Court of Justice was unnecessary because the court had reached a clear view and had no real doubt requiring a reference.