Australia: Exclusive jurisdiction clauses in legal Terms of Engagement

Last Updated: 14 June 2019
Article by Geoff Farnsworth
Most Read Contributor in Australia, June 2019

Local courts (in some states, magistrates courts) are the lowest rung on the Australian jurisdictional ladder.

Judgments of magistrates are seldom reported, but the decision in Watson Farley & Williams (Thailand) Ltd v Briton [2018] NSWLC 8 is a cautionary tale worth noting.

Watson Farley & Williams (Thailand) Ltd (WFW) is a member of the well-known global legal practice.

It provided legal services to (presumably) an Australian resident, Mr Brighton (or Briton) for which the firm was unpaid in an amount of Thai baht equivalent to $8249.24.

The firm had sent Mr Brighton its Terms of Engagement, which included its standard terms and conditions.

The firm commenced proceedings in the Local Court to recover the debt.

Mr Brighton raised various objections, including that the firm didn't perform the work (which the Court rejected) and the work was done for a company TKAM Pty Ltd, rather than for him personally (which the Court also rejected).

Mr Brighton also sought to rely on the firm's standard terms and conditions annexed to the Terms of Engagement which included a clause which referred disputes to the "exclusive jurisdiction of the Courts of England and Wales under the laws of England."

Magistrate Antrum observed that: "The Plaintiff is a law firm which might be expected to understand the clauses it includes in its agreement."

He added: "I cannot speak or make any authoritative comment in relation to Thai law but I would expect that lawyers operating in an international legal services environment would be well versed in the usual interpretation around exclusive jurisdiction clauses particularly where they defer to the law of England and Wales.

The Magistrate referred to the leading NSW Court of Appeal decision of Global Partners Fund Ltd v Babcock & Brown Ltd (in liq) [2010] NSWCA 196 saying:

"The ratio of each of the members of that bench was that an exclusive jurisdiction clause in a commercial contract is not to be narrowly construed. The court to which the parties agree to submit their disputes should determine disputes arising from the contractual relationship."

Further, in the context of a contract intended to have international operation, there is no basis for a narrow interpretation of an exclusive jurisdiction clause. Chief Justice Spigelman observed that although an exclusive jurisdiction clause will not operate to exclude the matter being reviewed by another court, that court, at least in New South Wales, will hold their parties to the bargain.

As Spigelman CJ observed: "a significant purpose of an exclusive jurisdiction clause is to ensure that all disputes are determined in a coherent manner by a single jurisdiction."

The Magistrate concluded that: "this claim is misconstrued and should have been referred to the Courts of England and Wales as the Terms of Engagement clearly articulate." He entered judgment for the Defendant, dismissed the Statement of Claim but in a small mercy, made no order as to costs (the Defendant was not legally represented).

The decision is a reminder (if one were needed) of the potency of an exclusive jurisdiction clause which in this case operated against the interests of WFW. Lawyers (like all businesses) must occasionally take action to recover debts, but it is hard to see WFW first obtaining a judgment in the UK (having taken steps to serve out of the jurisdiction) then taking steps to enforce that judgment in the Defendant Debtor's jurisdiction.

With the benefit of hindsight, an agreement to refer disputes to arbitration may have had greater utility.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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