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Competing jurisdiction issues – Am Trust Europe Ltd v Trust Risk Group SpA [2014] EWHC 4169 (Comm)

Jurisdiction clauses are common in international contracts as they establish the country that shall have jurisdictions for settling disputes arising…

Jurisdiction clauses are common in international contracts as they establish the country that shall have jurisdictions for settling disputes arising from those contracts.

The recent case Am Trust Europe Ltd v Trust Risk Group SpA [2014] EWHC 4169 (Comm) illustrated the difficulties that may arise where parties enter separate agreements which have competing jurisdiction clauses.

As a reminder; the Fiona Trust Presumption is the presumption that parties, as rational business people, intend all disputes to be tried in one country’s jurisdiction. However, the presumption can be displaced if different agreements deal with distinct aspects of the parties’ relationship. Hence, allocating jurisdiction in cases where there are competing jurisdiction clauses is a matter of construction.

Facts:
The Claimant, a UK subsidiary of an American insurance group, and the defendant, an Italian insurance broker, entered into a standard terms of business agreement (TOBA) which was subject to English law and jurisdiction. Subsequently, the parties entered into a Framework Agreement (FA) which contained an Italian arbitration clause. In 2014, the business relationship between the parties broke down and the claimant commenced proceedings seeking a mandatory injunction requiring the defendant to pay a sum of money into a bank account.

The defendant argued that the English Court did not have jurisdiction to grant the injunction sought as the parties agreed that disputes shall be settled by arbitration in Milan. The defendant submitted that after the parties entered in the FA, the TOBA ceased to exist as a separate document and, from then, there was only a single agreement.

The claimant stated that the Fiona Trust presumption was displaced as the TOBA dealt with premium payments whereas the FA related to exclusivity. Besides, the two documents were entered into at different times. As the result, the claimant submitted that the TOBA remained a separate agreement with its own jurisdiction, England and Wales.

The wording of the documents was relevant to this case. In the FA, the TOBA had been scheduled to the FA as an “integral part” of the FA. Besides, certain clauses of the FA refer to this agreement “including its schedules” and other clauses, comprising the arbitration clause itself, referred to “this Agreement” only.

Decision
The issue was whether the claimant could show a good arguable case (lesser hurdle than “proof on the balance of probabilities”) that the English courts had jurisdiction. The judge’s reasoning on both sides arguments can be found in the Judgement at paragraph [50].

The Judge was satisfied that the claimant showed a good arguable case that the TOBA remained a distinct agreement. Consequently, the English Court had jurisdiction to grant a mandatory injunction.

Conclusion
Despite the fact that the Fiona Trust presumption is still carrying considerable weight, this decision demonstrates that, in certain circumstances, the presumption can be displaced. It is likely that competing jurisdiction clauses will be given effect where there are distinct agreements dealing with different issues and these agreements are entered at different times.