Global Partners Fund Limited v Babcock & Brown
Limited (in liq.) & Ors  NSWCA 196
The New South Wales Court of Appeal considered the effect of a
foreign jurisdiction clause on a commercial claim issued in the
The plaintiff sought to justify the proceeding on the basis that
the alleged breaches of tortious, fiduciary, or contractual
obligations concerning a partnership agreement had occurred within
this jurisdiction. There was a clause in the agreement giving
exclusive jurisdiction to a foreign court to determine all disputes
arising from the agreement. The respondents applied to stay the
proceeding on that basis.
The Court of Appeal granted the stay. It ruled that, in the
absence of strong reasons to the contrary, a foreign jurisdiction
clause would be enforced. It was not appropriate for claims to be
determined by courts other than that to which the parties have
agreed to submit their disputes.
The plaintiff was an investor. It sued Babcock & Brown
Limited (in liquidation) ('Babcock &
Brown') and its subsidiaries to recoup losses suffered
from a failed investment. It was alleged that their Sydney office
had ultimate control over certain key decisions about the
The plaintiff had entered into a partnership agreement with
Babcock & Brown for the purposes of making investment on a
global basis. There was a clause giving exclusive jurisdiction to
the English courts to determine any dispute arising out of or in
connection with the agreement. The subsidiaries were expressly
given a right to rely on the clause although they were nonparties
to the agreement.
At the time of commencement, there were proceedings on foot in
the English courts that included some aspects of the conduct
complained of in this proceeding. There was a risk of multiplicity
Babcock & Brown and its subsidiaries applied to stay the
proceeding on the basis that the dispute should be brought before
the English courts. They also argued whether the court was an
inappropriate forum ("forum
The following questions fell to be determined: (a) whether
considerations that applied to forum non-conveniens also applied to
an exclusive jurisdiction clause; (b) whether a stay should be
granted to enforce the clause regardless of any connection of the
dispute with the present jurisdiction; and (c) if yes to (b),
whether non parties to the agreement are entitled to take the
benefit of the clause.
Babcock & Brown contended that the exclusive jurisdiction
clause should prevail. The subsidiaries argued that they too had a
right to rely on the clause to stay the claims made against
The plaintiff contended otherwise. It was argued that the
dispute was properly before the court considering the circumstances
of the claim. It said there was no evidence to show that the court
was forum nonconveniens. Further, the subsidiaries were not parties
to the agreement and therefore could not rely on the exclusive
Primary Judge's decision
The primary judge dismissed the proceeding. The judge justified
his conclusion on various independent bases, including the grant of
stay to enforce the exclusive jurisdiction clause.
An additional issue arose in this dispute. The plaintiff
required the leave of the court to proceed against Babcock &
Brown since it was in liquidation. Leave was refused because there
was clear evidence that Babcock & Brown was not in a financial
position to finance litigation.
Decision of the Court of Appeal
The Court of Appeal resolved the appeal unanimously on the basis
of the exclusive jurisdiction clause.
The Court found it was not appropriate for disputes that arise
from a contractual relationship to be determined by courts other
than that to which the parties have agreed to submit their
Where an agreement confers rights on identified non-parties, the
exclusive jurisdiction clause should be construed as binding the
parties with respect to the proceeding in which those rights might
The subsidiaries, though not parties to the partnership
agreement, were entitled in their own right to rely on the clause
and request for a stay with respect to the claims against them.
The Court also said that the considerations applicable to
staying proceedings based on forum non-conveniens were not
applicable to applications based on an exclusive jurisdiction
clause. A court will give primacy to the foreign jurisdiction
clause and enforce it by granting a stay unless there are strong
grounds (such as bias or countervailing circumstances) to justify
refusal. In this instance, there was found to be none.
The Court also said that the trial judge was correct to take
into account Babcock & Brown's inability to finance
litigation as a relevant consideration in refusing leave to proceed
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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