Asymmetric Jurisdiction Clauses following ECJ Ruling in Case C‑537/23
One-sided or asymmetric jurisdiction clauses — under which one party may bring proceedings in multiple jurisdictions, while the other is limited to a specific forum — are widely used in financing transactions for the benefit of the lenders. In a recent ruling, the European Court of Justice (the “ECJ”) held that asymmetric jurisdiction clauses shall be respected by the courts of EU member states (and Lugano Convention states), subject to certain pre-requisites, thus clarifying previous uncertainty as to whether asymmetric jurisdiction clauses are contrary to the requirements of the Council Regulation (EC) No 1215/2012 of 12 December 2012 (the “2012 Brussels I Regulation “) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. The judgment has had an impact on the use of one-sided jurisdiction clauses in the Swedish market.
The Case
In its judgment of 27 February 2025 in Case C-537/23 (Lastre), the ECJ had been referred a request for a preliminary ruling from the French Supreme Court (Fr. Cour de Cassation). The underlying dispute concerned a contract between two companies, based in Italy (Agora) and France (SIL) respectively, for the delivery of panelling to a construction project. The contract included an asymmetric jurisdiction clause, providing that Brescia, Italy would have jurisdiction over any dispute arising from or related to the contract, but where SIL reserved the right to bring proceedings against the purchaser before another competent court in Italy or elsewhere. In proceedings before the courts of France, relating to deficiencies in the underlying project and initiated against the parties by the commissioners of the project, the question arose whether French courts had jurisdiction over an action brought by Agora against SIL, despite the one-sided nature of the jurisdiction clause. The French courts of first and second instance had ruled that the asymmetric nature of the jurisdiction clause rendered it unlawful, rejecting an objection raised by SIL that French courts lacked jurisdiction per the contract.
The Ruling
The ECJ held that, with reference to Article 25(1) of the 2012 Brussels I Regulation, the question of whether the imprecision or asymmetry of an agreement conferring jurisdiction renders such agreement invalid must be examined in light of autonomous criteria derived from EU law, as opposed to the laws of any individual EU Member State. Once that was established, the court proceeded to hold that, per Article 25(1) of the 2012 Brussels I Regulation, one-sided or asymmetric jurisdiction clauses shall be valid if:
- they designate the courts of one or more EU member states, or of a contracting party to the Lugano Convention;
- they set out objective and sufficiently precise criteria enabling the court seised to determine whether it has jurisdiction; and
- they do not conflict with Articles 15, 19 or 23 of the 2012 Brussels I Regulation, which provide mandatory protections for consumers, employees and certain insured persons.
The ECJ noted that the requirement for objective and sufficiently precise criteria must be deemed met where the agreement designates, on the one hand, a particular court and, on the other hand, other courts which have jurisdiction pursuant to the 2012 Brussels I Regulation and/or the Lugano Convention. However, the ECJ also noted that if a jurisdiction clause can be interpreted as to designate one or several courts of one or more non-EU or Lugano Convention states, it would be contrary to the requirements of the 2012 Brussels I Regulation since that would require application of the rules of private international law of third countries.
Reception in the Swedish market
Notably, the requirements laid down by the ECJ in its ruling have made their way into the drafting of one-sided jurisdiction clauses in the Swedish market. Where finance parties would previously be expressed as having a right to take proceedings in any court which may otherwise exercise jurisdiction of the debtor or any of its assets, such right is increasingly limited to such courts in a member state of the European Union or a state that is a contracting party to the Lugano Convention. This is to align the one-sided jurisdiction clause with the requirements set forth by the ECJ, so that the prorogation is upheld by the courts in an EU member state should the debtor seek to initiate proceedings before such court despite the one-sided nature of the jurisdiction clause.
Non-EU asymmetric jurisdiction clauses and recognition of foreign judgments under the 2005 and 2019 Hague Conventions
The ECJ ruling and the 2012 Brussels I Regulation only apply to ‘EU one-sided jurisdiction clauses’, i.e. where the exclusive element of the jurisdiction clause points to an EU member state. Following Brexit, this does not include agreements that are governed by English law and designating English courts as the forum chosen by the parties (as is very common in financing arrangements). There is no comprehensive convention in place between the EU and the UK regarding recognition of agreements conferring jurisdiction and so other than when the 2005 Hague Convention applies Swedish courts will apply domestic rules of international private law when determining jurisdiction. As regards recognition of foreign judgments, the 2005 Hague Convention has enabled recognition of English judgments, but only to the extent the underlying agreement is an exclusive choice-of-court agreement within the meaning of that convention (thus excluding asymmetric jurisdiction clauses). In respect of ongoing development with respect to recognition of English one-sided jurisdiction clauses, please refer to our article on the 2019 Hague Convention which covers non-exclusive choice-of-court agreements and is due to enter into force between the EU (excluding Denmark) and the UK on 1 July 2025, provided that the EU does not opt out before such date. Article can be found here.
