CJEU Rules on Validity of Asymmetric Jurisdiction Clauses
On 27 February 2025, the CJEU delivered its ruling in Case C‑537/23, Società Italiana Lastre SpA (SIL) v. Agora SARL.
The case was referred by the French Cour de cassation which, at last, asked the CJEU whether asymmetric jurisdiction clauses are valid under the Brussels I bis Regulation.
As is well known, the Cour de cassation has invalidated such clauses on the ground that they did not allow the identification of the competent court, and thus violated a principle of foreseeability of the clause. According to the French court, the issue was not so much that such clauses were asymmetric, it was rather that they allowed one of the parties to sue in any court of competent jurisdiction, which was often found to be too imprecise and thus to violate a requirement of foreseeability.
The Relevant Clause
In this case, the relevant jurisdiction clause was included in a supply agreement, and provided:
the court of Brescia [(Italy)] will have jurisdiction over any dispute arising from or related to this contract. [SIL] reserves the right to bring proceedings against the purchaser before another competent court in Italy or elsewhere.
EU law or National law?
The first issue to be addressed by the CJEU was whether issues raised by asymmetric jurisdiction clauses were governed by EU uniform rules, deduced from Article 25 of the Brussels I bis Regulation, or whether such issues were governed by national law. One possible justification for the application of national law could be found in the express submission of whether the clause is “null and void as to its substantive validity” to the law of the chosen court.
In order to answer this question, the CJEU makes several clarifications.
First, the concept of “null and void as to its substantive validity” is to defined autonomously at EU level. No surprise here.
Second, the court rules that the concept covers general causes of nullity of contract such as vitiating factors and capacity. In contrast, the court rules that the concept does not cover conditions of validity which are specific to jurisdiction clauses, which are governed by EU uniform law, i.e. Article 25.
Third, the issue of whether the alleged imprecision of a clause granting jurisdiction to all competent courts might be cause for concern is a condition of validity specific to jurisdiction clauses. It is therefore governed by EU law.
Precision Requirement
So, what is the content of the EU uniform rule on this point? The court rules that EU law does indeed include a precision requirement, which is implicit in the requirement that the parties agreed on the competent court. Although it is not necessary to identify the court granted jurisdiction on the basis of the wording of the clause alone, sufficiently precise objective factors should be provided in the clause.
In the case at hand, the clause provided that one of the parties could sue “before another competent court in Italy or elsewhere”. This clause is found to violate the precision requirement.
The court explains, however, that the reason is that the Brussels I bis Regulation only makes it possible to identify “competent courts” in the EU. In contrast, as it does not regulate the jurisdiction of the courts of third States, it does not make it possible to identify ‘competent courts’ outside of the EU. To identify them, it would be necessary to apply the rules of international jurisdiction of third States, and this seems to be unacceptable for the court.
Thus, the clause would have complied with the requirement of EU law if it had granted jurisdiction to “any competent court of an EU member State or a State applying the Lugano Convention”.
The key lessons of the judgment seem to be that
- a clause granting jurisdiction to ‘competent’ courts is sufficiently precise,
- but only if the determination of the jurisdiction of those courts is governed by European law.
Asymmetry Irrelevant
The CJEU, on the other hand, rules that asymmetry is irrelevant.
The court explains that the principle is that of freedom of choice of the parties, and that the only derogations to that principle are those expressly formulated in the Brussels I bis Regulation, i.e. to protect weaker parties and rules of exclusive jurisdiction.
2005 Hague Convention
The court refers to the 2005 Hague Convention at the beginning of its judgment. Why it does so is unclear, but somewhat worrying, as it may signal that it considers that the issues should be addressed in the same way under the two instruments.
The Hague Convention, however, only applies to exclusive choice of court agreements, and it is most doubtful that clauses granting options to one of the parties such as the one in this case can be characterised as exclusive.
Thanks for commenting on this much-awaited ruling from the CJEU. I want to raise three points for discussion:
1) The Court rules that Art. 25 Brussels Ibis Regulation incorporates a requirement of sufficient precision where it provides ‘the parties have agreed that a court(s) of a MS have jurisdiction’. In which relationship does this sufficient precision requirement enter with the (autonomous) requirement of the existence of consent, which the Court had derived exactly from the same part of Art. 17 Brussels Convention and Art. 23 Brussels I Regulation (‘the parties have agreed’)? In my view, it is the same requirement. For a choice of court agreement to be valid, consent of the parties to give jurisdiction to certain courts must exist. If parties don’t know which courts they are giving jurisdiction to (because the clause is not sufficiently precise), no consent on conferral of jurisdiction to a given court(s) can be said to exist. If it is the same requirement, what was the purpose of calling it by another name (sufficient precision requirement rather than existence of consent requirement)?
2) The Court rules that the validity of an alleged unbalanced asymmetric choice of court agreement is to be assessed against the sufficient precision requirement which is to be autonomously derived from Art. 25 of the Regulation (§ 51). However, it also rules that “the asymmetric nature of such an agreement does not render it unlawful, if the parties have freely consented to it” (§ 64). The Court is saying that to be lawful, an asymmetric choice of court agreement must have been freely consented to by the parties. To decide whether the parties have freely consented to it and to ascertain whether the party with inferior bargaining power was forced to enter it, we must look at the law applicable to the choice of court agreement according to the conflict of law rules of the chosen court. It seems here that what was thrown out from the door (the lex fori prorogati approach) enters back from the window.
3) The Court says that to be valid, an asymmetric choice of court agreement must confer jurisdiction to courts of EU MS or courts of States parties to the Lugano Convention (§ 67). I don’t get why this should be a matter of validity. If an asymmetric choice of court agreement provides that a party is bound to refer a given dispute to an Italian court and that the other party must refer the dispute either to an Italian or to a court of a third State, this is an issue of applicability of the Art. 25 of the Brussels Ibis Regulation/Art. 23 of the Lugano Convention rather than one of validity of the choice of court agreement under these two normative instruments.
Thanks for your comment Caterina.
On your first point, I think it does not hurt to clarify that consent to a jurisdiction clause implies a certain degree of precision in the determination of the designated court(s). The law is clearer when it is formulated in specific contexts, and that is what the court does by saying that consent implies precision, and then gives some indication of what precision means.
Your third point is difficult I think. It shows how difficult it is to determine the applicable legal regime to clauses granting jurisdiction to courts of several countries in a context where the applicability of the different regimes is determined by the designation of a court subject to a given regime. Brussels I bis applies to jurisdiction clauses designating courts of MS, but not to clauses designating the courts of third States: what do we do with clauses designating both courts of MS and courts of third States? Should we apply the relevant legal regimes distributively? If so, would that mean that the CJEU should have left the assessment of the part of the clause granting jurisdiction to the courts of third States to the national regime of the Member States? Possibly. Then, should the ruling be interpreted restrictively in this respect? Well, recent cases such as Inkreal have not shown the willingness of the Court to leave much space to the national law of the MS in this respect…
The question whether the clause at hand meets the precision requirement was left to the referring court, so it’s probably a bit too early to say that it didn’t. Despite the wording of paras 60-62 of the ruling, I am inclined to say that the clause meets the requirement. Since if precision dictates that a court seized must be able to readily identify its own jurisdiction (paras 42, 62) without having to rely on “the application of the rules of private international law of third countries” (para 60), your average reference to “any other competent court” in a non-exclusive jurisdiction clause means that courts other than the chosen one only need to apply their lex fori to determine whether they can accept jurisdiction. The fact that a court outside of the EU/Lugano sphere MIGHT also be a competent court under their lex fori and the fact that the jurisdiction clause is not limited to the EU/Lugano sphere would be irrelevant, since the EU court seized would never need to investigate that foreign law before it can accept jurisdiction.
I think that the reference to the rules of PIL of third States does not mean the reference to choice of law rules, but to rules of international jurisdiction. Obviously, these will be rules of the lex fori of the foreign forum, but they might be very complicated. One obvious example is the English rules of international jurisdiction, with their sophisticated test for service outside of the jurisdiction.
Thanks for your response. Agree that the third states reference should be to international jurisdiction. And indeed, they might be complex. But the question is what type of impact this potential complexity should have.
For an EU/Lugano court seized to readily establish its own jurisdiction, as is required under the precision test: those foreign rules are irrelevant for the EU/Lugano court to determine whether or not it comes within the scope of “any other competent court”. The one stakeholder adversely affected by this type of open-ended clause is the party that accepted the non-exclusivity. Since it has become difficult to foresee where the litigation might end up. But if party autonomy is respected here (see para 64, and ultimately recital 19 of the Regulation), it is difficult to look at that element as something that justifies a substantive restriction. Recitals 15-16 would seem very far-fetched as a justification for such a restriction, to be honest.
‘having decided, after hearing the Advocate General, to proceed to judgment without an Opinion’
It shows.
In my eyes, the CJEU solely dealt with the imprecision of such a clause. The court rightfully concluded that (under the Brussels Ibis regulation) a clause that refers to the jurisdiction of any court according to any law does not fulfil the precision-criteria.
The court did not deal with the admissibility of a clause which confers jurisdiction to member state courts and third state courts in a way that is precise enough (e. g.: “the courts of Germany and the USA”).