We all know that we live in the age of technology. Gone are the
days where communities existed in isolation; where businesses run
by mums and dads sourced their inventory from another business just
down the road. Today it's considered foolish if a business
doesn't have an online presence or the ability to sell and
contract with parties in other states or countries.
The globalisation trend in business also carries ramifications
when it comes to resolving disputes between parties in different
jurisdictions. The general method is that businesses have standard
terms and conditions that contain a "jurisdiction
clause" that provides in the event of a dispute the
parties will submit to an agreed jurisdiction. So in the
unfortunate event of a conflict, having the security of being able
to deal with a dispute in your home state is crucial as, amongst
other advantages, it affords you familiarity with the local court
system as well as mitigating the amount of time you need to spend
away from your business to resolve the matter.
However, when things go pear-shaped, is simply relying on a
standard "jurisdiction clause" enough to
guarantee you a home field advantage? The short answer is no.
When Court proceedings are commenced a party can bring an
application to the Court seeking those proceedings be transferred
to another jurisdiction. Upon hearing that application a
"jurisdiction clause" is only
one of many factors that a Court must consider in
determining whether it should order a transfer.
While there is no hard and fast list of relevant considerations
a Court must have regard to, it has been held that the ultimate
test is which Court it is most appropriate for the claim to proceed
Having said that, below are a few of the many considerations
that a Court takes into account which may tip the scales in your
Bargain of the parties
This is a reference to the agreement entered into between the
parties. It's also where you would place the
"jurisdiction clause" referred to above.
However, simply having a standard terms and conditions document
which includes a "jurisdiction clause" isn't enough
to bind a party to a particular jurisdiction. A Court will place
weight on the following:
Is the "jurisdiction clause" exclusive
– for example, does the jurisdiction clause expressly state
that any disputes will be heard in one jurisdiction to the
exclusion of other jurisdictions or does the clause simply express
a preference for one jurisdiction over another.
Did the party relying on the terms and conditions draw
particular attention to those terms and conditions when entering
into the contract? For example, it may not be enough to rely on
simply having the words "Please see our Terms and Conditions
of Sale" in your email signature.
Any relevant representations made by each of the parties
leading up to the formation of the contract.
Connection with the jurisdiction
Simply put, a Court will look at where it is more convenient to
hear the claim. If a claim involves five witnesses who all live in
a single state, then the Court will place a certain amount of
weight on this fact.
The above are just a couple of the many considerations that a
Court will have regard to when determining the most appropriate
jurisdiction to hear an action. Ultimately though, it is up to the
Court to weigh up all the relevant factors and
give appropriate weight to each of them to determine where the
interests of justice lie overall.
You should ensure that you have your standard terms and
conditions of sale, including any "jurisdiction
clause," periodically checked by a legal professional to
ensure they achieve their purposes.
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.
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