English Court of Appeal Decides on an Asymmetric Jurisdiction Clause

On 17 April 2025, the Court of Appeal of England and Wales delivered a judgment in Hipgnosis SFH 1 Ltd v Manilow ([2025] EWCA Civ 486; Sir Julian Flax C, with LJJ Phillips and Snowden agreeing) on the interpretation and effect of an asymmetric jurisdiction clause.

Facts

The parties had entered into a contract containing the following dispute resolution clause:

This Agreement and any related dispute or claim (contractual or non-contractual) shall be governed by, and construed in accordance with, English law. Each party irrevocably submits for all purposes of this Agreement (including any such dispute or claim) to the exclusive jurisdiction of the English courts. Any judgment obtained in the English courts may be enforced in any other jurisdiction. Notwithstanding the foregoing, any claims made by BM against Hipgnosis related to the Purchase Price may be brought by BM in the courts of Los Angeles, California or New York City, New York and solely in connection with such claims, Hipgnosis hereby agrees to submit to the jurisdiction of the courts located in Los Angeles, California and New York City, New York.

A dispute arose. One party (Hipgnosis) commenced proceedings in England, seeking declarations in respect of receipts due under the contract and the purchase price. 16 days later, the other party (BM) brought a claim related to the purchase price, along with some other claims, in California. The jurisdiction of English courts depended on the interpretation and effect of the jurisdiction clause.

Lower Court’s Judgment

The High Court ([2025] EWHC 444 (Ch); Smith J) stayed the purchase price claim, controversially holding that:

although the English Proceedings were properly commenced by C and that service out was regular, that was only because D had not, at this stage, made their choice as to jurisdiction, which choice was conferred on D (but not on C) by Phrase [4]. Exercising that choice – by commencing the Los Angeles Proceedings within a reasonable time of the commencement of English Proceedings by C and by making the Application – crystallised the floating jurisdiction between England on the one hand and Los Angeles/New York on the other in favour of Los Angeles. [18]

The claimant appealed.

Court of Appeal’s Judgment

The Court of Appeal addressed the issues of the meaning and effect of the jurisdiction clause and the exercise of jurisdictional discretion.

This was a complex clause. It was exclusive for Hipgnosis – it could only commence proceedings in England for any dispute or claim related to the contract. It was partly exclusive and partly unilaterally non-exclusive for the other party – BM had an option to bring claims related to the purchase price in Los Angeles or New York. This means that the English proceedings were properly commenced. On the other hand, the Los Angeles proceedings were also properly commenced to the extent to which they related to the purchase price; however, the bringing of other claims in Los Angeles breached the clause.

The court also had to consider whether the clause permitted parallel proceedings. Following Mauritius Commercial Bank Ltd v Hestia Holdings Ltd [2013] EWHC 1328 (Comm), [40], and Etihad Airways PJSC v Flöther [2020] EWCA Civ 1707, [4], the court held that this ‘is a possibility which is inherent in an asymmetric jurisdiction clause’ and noted that ‘there are only parallel proceedings because the respondent chose to exercise the option’ [56]. The High Court’s conclusion that the exercise of the option crystallised the floating jurisdiction in favour of Los Angeles courts was dismissed as ‘heretical and contrary to authority’, as ‘the jurisdiction of the English court is determined at the date of issue of proceedings’ [57].

The court did not decide whether Article 5(2) of the Hague Convention applied to asymmetric jurisdiction clauses [72]. However, if it did not apply, and if the court had discretion not to exercise jurisdiction, the Court of Appeal nevertheless refused to stay the purchase price claim on the basis that ‘the English court is the one court where all the issues between the parties can be determined in a single jurisdiction’ [71].

Discussion

The Court of Appeal’s judgment appears sound. The main lesson this case teaches us is that parties must take great care when incorporating an asymmetric jurisdiction clause into their agreement. They should clearly specify which claims are covered by the jurisdictional option and consider whether the option must be exercised within a particular timeframe and what should happen if proceedings are commenced pursuant to the clause by either party. Lack of clarity can, as Hipgnosis demonstrates, result in a breach of a jurisdiction clause and in parallel proceedings.