Commercial Court Dismisses Application For Stay On Basis Of English Jurisdiction Clause And Forum Non Conveniens Waiver Clause

The wording of the clause meant the defendants were estopped from contending that England was not the most appropriate forum.

The Commercial Court has dismissed an application for a stay of proceedings on the grounds of forum non conveniens, as the defendants had failed to show strong reasons to depart from the contractual agreement on jurisdiction: Investec Bank Plc v Pavlo Protopapa & Anor [2025] EWHC 3202 (Comm)

The court also held that the defendants were contractually estopped from denying that England was the most appropriate forum. This was because the parties had expressly agreed that the courts of England were the most appropriate and convenient courts to settle disputes arising under the contracts at issue (as well as agreeing not to argue to the contrary). The defendants were therefore not able to argue that England was not the most appropriate forum.

It is common to include a provision in a jurisdiction agreement which limits a party's ability to challenge the jurisdiction of the English courts. Typically this takes the form of a forum non conveniens waiver, which is a promise not to argue that proceedings commenced in the chosen court are inconvenient and that there is some other more suitable court (the forum conveniens) in which the case should be heard. The effect of such wording is that, while the court retains a discretion to grant a stay on forum non conveniens grounds, that discretion can only be exercised on very strong or exceptional grounds.

A jurisdiction clause will sometimes also incorporate a positive agreement that the courts of a particular jurisdiction are the most appropriate to settle a dispute. The present decision suggests that including a positive agreement of this sort may operate as a contractual estoppel to prevent forum non conveniens arguments altogether. Parties may therefore wish to consider bolstering their jurisdiction clauses in this way - although, as a first instance decision, this approach will not be binding in future cases and, in any event, it is rare that the English court will not give effect to an English jurisdiction clause.

Background

The application arose in the context of a dispute between the claimant, a bank incorporated in England, and two Swiss-resident defendants over sums due under two credit facilities.

The facilities incorporated the claimant's standard terms. These terms included an asymmetric jurisdiction clause in favour of the English courts for the benefit of the claimant. The clause provided that "the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly neither of them will argue to the contrary."

The defendants applied for an order that the English court should not exercise jurisdiction because Switzerland was the more suitable forum to hear the claim.

The claimant contended that England was the more suitable forum for the resolution of their claims, and in any event the defendants were contractually estopped from contending otherwise.

The defendants accepted that the English court would not grant a stay on forum non conveniens grounds where there was an English jurisdiction agreement, unless the party seeking a stay could demonstrate strong reasons to the contrary. In this case, they argued that there were strong reasons including on the basis that:

• the facilities were part of a bigger framework of agreements relating to a Swiss transaction in Swiss Francs concerning Swiss assets, with a number of associated agreements containing Swiss governing law and jurisdiction clauses;
• it was an implied term of all the framework documents that rational businessmen would want all potential disputes to be heard in the same jurisdiction if possible;
• the majority of the defendants' assets were located in Switzerland;
• the claimant had already started proceedings against a related party in Switzerland;
• one of the defendants might seek a contribution from the other defendant or a related party, and that would be pursuant to an agreement governed by Swiss law and jurisdiction;
• the claimant might wish to join a related party as a primary obligor, and the relevant agreement in this regard was subject to a Swiss law and jurisdiction clause; and
• there was a risk of a multiplicity of proceedings and disputes taking up the parties' time and costs, and an inevitability of further related litigation if the claimant were to obtain judgment from the English courts and then seek to enforce in Switzerland.

The claimant submitted that none of the defendants' forum non conveniens arguments amounted to strong reasons for overriding the contractual terms. They were also matters which were foreseeable at the time of contracting. In any case, the claimant contended that the jurisdiction agreement created a contractual estoppel which prevented the defendants from denying that England was the most appropriate forum.

The claimant also contended that the second defendant had submitted to the jurisdiction, as he had filed an acknowledgement of service ticking the "intend to defend" box but not the "intend to challenge jurisdiction" box. He had also sought an extension of time to serve his defence. In neither case was there any reservation of rights as to jurisdiction or an indication of an intention to challenge jurisdiction.

The second defendant argued that none of his conduct amounted to a wholly unequivocal submission to jurisdiction. In any event, a defendant who had submitted to jurisdiction was not, by that reason alone, debarred from seeking a stay on the basis of forum non conveniens.

Decision

The High Court (Peter MacDonald Eggers KC sitting as a deputy judge) dismissed the defendants' application. He held that the defendants had not established an entitlement to a stay on forum non conveniens grounds, and in any event were estopped from so doing because they had agreed not to argue that England was not the most appropriate forum.

Forum non conveniens

The court should have regard to the fact that the parties had contractually selected England as their forum and should only permit proceedings in another jurisdiction if there were strong or very strong reasons for doing so (there was perhaps not much difference between the two formulations).

The fact that the parties had contractually bound themselves to the English court's jurisdiction meant that this was not just a simple question of whether there was a more suitable forum than England. The hurdle was higher, requiring strong or very strong reasons. Regarding matters of convenience, it was not open to a party to object to the exercise of the chosen jurisdiction on grounds that should have been foreseeable when the agreement was made.

There was a dispute between the parties as to whether the jurisdiction clause in the facilities was exclusive or non-exclusive, and this was not a dispute the court had been asked to resolve. However, the requirement for strong reasons in order to stay proceedings on forum non conveniens grounds applied whether the parties had agreed to confer exclusive or non-exclusive jurisdiction on the English courts.

The reasons offered by the defendants were not sufficiently strong to permit them to resile from their contractual agreement on jurisdiction. In particular:

• The facilities were governed by English law and subject to an English jurisdiction agreement. The related agreements for the most part involved different parties.
• In entering into the facilities on the terms they did, the parties must have been aware of where they could (and could not) litigate any disputes arising. Any factors which might contribute to an assessment of whether England or Switzerland was the more appropriate forum were reasonably foreseeable.
• The claimant's claims under the facilities were based on an alleged default. They did not depend on establishing any relief available under related contracts.
• Although it might be desirable for the parties to have all of their disputes resolved in one jurisdiction, no such term should be implied where the parties had knowingly entered into agreements to the contrary. In any event, an argument that there should be an implied term along these lines did not necessarily speak in favour of Switzerland as opposed to England.
• The prospect of one of the defendants commencing proceedings for an indemnity or contribution should not deprive the claimant of its contractual entitlement.
• The parties' agreement that the English courts were the most appropriate and convenient courts to settle disputes, and accordingly neither of them would argue to the contrary, reinforced the fact that the parties had entered into the facilities in full recognition that the exercise of the court's jurisdiction should not be refused on grounds of convenience.
• The facilities were governed by English law. The English court was better placed to deal with issues of English law than the Swiss court.

The defendants were therefore not entitled to a stay on forum non conveniens grounds.

Contractual estoppel

Contractual estoppel referred to a principle whereby parties were held to their agreement that a state of affairs existed, even if this was not actually the case. Where contracting parties had concluded a contract containing an acknowledgement of a particular state of affairs, the makers of the statement were therefore estopped from asserting in litigation that the opposite was true.

The jurisdiction clause in the facilities included a provision on forum non conveniens that contained two components:

1. an agreement that that the courts of England were the most appropriate and convenient courts to settle disputes; and
2. a promise by the parties that neither of them would argue to the contrary (sometimes called an FNC waiver).

The effect of the authorities was that, where parties to a contract had agreed an FNC waiver clause, the court retained a discretion to grant a stay on forum non conveniens grounds but would only exercise that discretion on very strong or exceptional grounds.

In this case, however, as well as the FNC waiver clause there was an additional agreement that the courts of England were the most appropriate forum. The judge noted that it might be said that this additional agreement added little or nothing to the FNC waiver clause, but said he did not consider that that was the case. In his judgment, the additional agreement was different from the FNC waiver. Applying principles of contractual estoppel, the defendants were estopped by such agreement from contending that English was not the most appropriate forum for the resolution of disputes arising under the facilities.

Submission to the jurisdiction

This issue no longer fell to be decided but the court considered it in any event.

The court would have held that the second defendant had not submitted to the jurisdiction for two reasons. First, it was necessary to consider the entirety of the facts and undertake an objective appraisal of whether the defendant had unequivocally recognised and submitted to the court's jurisdiction. In this case, considering the second defendant's conduct as a whole, there had been no submission to jurisdiction. Secondly, even if there had been a submission to jurisdiction, this did not prevent the second defendant from applying for an order that the court should not exercise that jurisdiction on forum non conveniens grounds. The power to grant a stay on such grounds presupposed that the court had jurisdiction. The question was whether or not the court should exercise it.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.