Hipgnosis SFH 1 Limited v Barry Manilow & Ors

A contractual jurisdiction clause must be construed as a whole, giving effect to every part of the agreement. A general exclusive English jurisdiction clause may be qualified by a later provision giving one party a limited choice of another forum for specified claims. That choice is not necessarily lost because the other party commenced proceedings first in England. Where the clause preserves that choice, the first commencement does not create a jurisdictional race. The court may stay the specified claims, while allowing distinct claims falling within the general English jurisdiction clause to continue.

Hipgnosis SFH 1 Limited brought proceedings in England concerning receivables under a music catalogue agreement. The defendants applied under Part 11 of the Civil Procedure Rules 1998 for the Purchase Price claims to be excluded or stayed.

The agreement was governed by English law and contained a general exclusive English jurisdiction clause. A later provision, beginning with the words “Notwithstanding the foregoing”, permitted the defendants to bring Purchase Price claims in Los Angeles or New York. The defendants commenced proceedings in Los Angeles after the English proceedings began. The central issue was whether the English proceedings deprived the defendants of that contractual choice of forum.

1. Construction of the clause. The court construed the agreement, and clause 14 in particular, as a single contractual arrangement. Phrase [2], read alone, was wide enough to cover the Purchase Price claims and constituted an exclusive English jurisdiction clause. It also fell within article 5 of the Hague Convention on Choice of Court Agreements 2005.
2. Phrase [4] nevertheless qualified Phrase [2]. The words “Notwithstanding the foregoing” expressly derogated from the general English jurisdiction clause. For Purchase Price claims brought by the defendants, the clause gave them a choice between England and Los Angeles or New York. The choice was unavailable to the claimant, but remained available to the defendants.
3. The defendants’ choice was not eliminated merely because the claimant had commenced Purchase Price claims in England. A construction producing a first-past-the-post jurisdictional race would encourage parallel proceedings and inconsistent outcomes, and would deprive the opening words of Phrase [4] of meaning. The defendants’ choice therefore survived the commencement of the English proceedings.
4. The defendants crystallised that choice by commencing the Los Angeles proceedings within a reasonable time and making the application. They were entitled to a stay as of right. Alternatively, the court would decline to exercise any jurisdiction it might have over the Purchase Price claims. The discretion to decline enforcement of an exclusive jurisdiction clause is rarely exercised, consistent with Donohue v Armco [2002] 1 All ER 749; The Eleftheria [1970] P 94 demonstrated the importance of party agreement.
5. The appropriate order was a stay with liberty to apply. The non-Purchase Price claims were permitted to proceed in England. The set-off plea in paragraph 8 of the Particulars of Claim was not itself a Purchase Price claim and could continue in this jurisdiction.