Etihad Airways PJSC v Flother

Article 31(2) of Regulation (EU) No 1215/2012 applies to an asymmetric jurisdiction agreement where the party which commenced proceedings outside the designated court had agreed to bring its claims exclusively in that court. A composite clause may contain a separate exclusive agreement governing one party’s claims and a non-exclusive agreement governing the other party’s claims.

Article 31(2) has priority over the first-seised rule in article 29(1). It should be construed according to its language, the principle of party autonomy and its purpose of preventing abusive proceedings in a non-designated court. The designated court is seised on the basis of the exclusive agreement when proceedings are brought there to enforce the counterparty’s promise to sue only in that court.

Air Berlin and Etihad entered into a facility agreement governed by English law. Its jurisdiction clause required Air Berlin to litigate disputes exclusively in England but permitted Etihad to bring proceedings in any court with jurisdiction. Air Berlin’s insolvency administrator subsequently commenced German proceedings against Etihad concerning a related comfort letter. Etihad began English proceedings seeking declarations which substantially mirrored the relief sought in Germany.

The German court was first seised. Jacobs J dismissed the administrator’s jurisdictional application, holding that article 31(2) of Regulation (EU) No 1215/2012 applied to the asymmetric clause: [2019] EWHC 3107 (Comm). Permission to appeal was confined to whether the English court had to stay under article 29 or instead had priority under article 31(2). The central issue was whether an agreement confers exclusive jurisdiction for article 31(2) when it binds only one party to use the designated court exclusively.

1. Appeal dismissed. Article 31(2) of Regulation (EU) No 1215/2012 applied to the asymmetric jurisdiction agreement. The English court was therefore not obliged to stay its proceedings under the first-seised rule in article 29. Henderson LJ gave the judgment, with which Hickinbottom and Newey LJJ agreed.

2. Article 31(2) should not be approached as a narrowly construed exception to article 29(1). Article 29(1) is expressly without prejudice to article 31(2), so the latter has priority when its conditions are satisfied. Both provisions must be construed according to their language and purpose. Recital (22) confirms the purpose of enhancing exclusive choice-of-court agreements and preventing abusive litigation in a non-designated court.

3. An asymmetric clause may be analysed as a composite agreement containing distinct obligations. Here, it comprised an exclusive agreement for claims brought by Air Berlin and a separate non-exclusive agreement for claims brought by Etihad. Nothing in article 31(2) required both parties to undertake identical obligations. This construction respected party autonomy and prevented a party which had promised to sue only in the designated court from defeating that promise by commencing proceedings elsewhere.

4. The contrary construction would leave the reversal of the result in Gasser incomplete. Widely used asymmetric clauses would remain vulnerable to pre-emptive proceedings in a non-designated court. Once an agreement falls within article 25 and confers exclusive jurisdiction over claims brought by one party, it falls within article 31(2) to that extent.

5. The probable exclusion of asymmetric clauses from the Hague Convention on Choice of Court Agreements 2005 did not control the autonomous interpretation of the differently worded Brussels regime. Consistent interpretation was desirable but not mandatory. The instruments differed in scope, structure and formal requirements, and the Hague Convention had no equivalent of the article 29 first-seised rule.

6. The English court was seised “on the basis of” the exclusive agreement. Etihad invoked the clause because it required Air Berlin to bring the relevant dispute exclusively in England. The correct interpretation was acte clair, so no reference to the CJEU was required.

1. Court of Appeal (Civil Division): The appeal was dismissed. The court affirmed that article 31(2) of Regulation (EU) No 1215/2012 applied to the asymmetric jurisdiction agreement: [2020] EWCA Civ 1707.

2. High Court, Commercial Court: Jacobs J dismissed the application disputing the English court’s jurisdiction. He held that article 31(2) applied and granted permission to appeal on the relationship between articles 29 and 31(2): [2019] EWHC 3107 (Comm).