UK: Giving Weight To Arbitration Clauses

This article was first published in an amended form in Lloyd's List.

Brussels is looking at ways to enforce jurisdictional agreements

When a contract such as a charterparty is being negotiated, it is common for the parties to agree to include either an exclusive choice of court or an arbitration clause to pre-empt jurisdictional disputes that may arise in the future.

However, when a party breaches a clause requiring, for example, disputes to be brought exclusively before an arbitral tribunal in London by commencing proceedings in the court of another European Union Member State, the ability of the other party to enforce the clause has in recent years been severely curtailed.

This curtailment results from a combination of the scope, application and mechanistic operation of the rules Council Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

The practical problems faced by legitimate claimants and the opportunities created for recalcitrant debtors as a result of the way in which the Regulation operates in this area has prompted calls across Europe for legislative reform. The end of that process is now in sight following the European Commission's proposal for recasting the Regulation.

To resolve the situation the Commission, which acknowledges the current situation to be too unsatisfactory in its explanatory memorandum accompanying the proposal, proposes a number of changes. These include the addition of article 29(4) to the Regulation, which would read:

"Where the agreed or designated seat of an arbitration is in a Member State, the courts of another Member State whose jurisdiction is contested on the basis of an arbitration agreement shall stay proceedings once the courts of the Member State where the seat of the arbitration is located or the arbitral tribunal have been seised of proceedings to determine, as their main object or as an incidental question, the existence, validity or effects of that arbitration agreement."

Article 29(4) goes on to provide: "Where the existence, validity or effects of the arbitration agreement are established, the court seised shall decline jurisdiction."

An arbitral tribunal is deemed to be seised under article 29(4) when "a party has nominated an arbitrator or when a party has requested the support of an institution, authority or a court for the tribunal's constitution" (article 33(3)).

Article 1(2)(d) of the Regulation is thus amended to provide:

"This Regulation shall not apply to arbitration, save as provided for in articles 29, paragraph 4 and 33, paragraph 3." Article 29(4) is drafted with the intention of giving effect to an arbitration clause in a contract and preventing the undesirable situation of having concurrent arbitral and court proceedings in EU Member States, a scenario which can now result following the decision of the European Court of Justice in the Front Comor.

The Commission's proposal is, however, very different from the suggestion of the European Parliament, which was to strengthen the arbitration exception in article 1(2)(d) of the Regulation by making it "clear that not only arbitration proceedings, but also judicial proceedings ruling on the validity or extent of arbitral competence as a principal issue or as an incidental or preliminary question, are excluded from the scope of the Regulation."

Instead, the Commission proposes to weaken the arbitration exception in article 1(2)(d) of the Regulation. Some Member States will probably be hostile to this aspect of the proposal, as it links arbitration to the control of the court of the seat at the outset of any proceedings.

It should also be noted that article 29(4) does not apply where no seat is chosen by the parties (whether directly or through the choice of a set of arbitral rules). Nor does the proposal deal with the situation when the place of the seat chosen by the parties is not in a Member State.

Presumably it is intended that in this situation the court of a Member State, whose jurisdiction is contested on the basis of an arbitration agreement, should apply its national law to determine how it is to proceed.

The Commission's proposal also precludes a return to the situation where the English court could grant an anti-suit injunction in support of a London arbitration clause and thus does not reverse the effect of the decision in the Front Comor as the European Parliament suggested should happen.

Instead, in order to enforce a London arbitration clause, the Commission proposes that the innocent party should nominate an arbitrator in accordance with the terms of the clause. Once the innocent party informs the court in which the proceedings have been commenced in breach of contract that it has done this, that court would then be obliged to stay its proceedings. The court in question would then have to decline jurisdiction once the "existence, validity or effects of the arbitration agreement are established" (article 29(4)).

With regard to improving the ability of a party to enforce a choice of court clause, the Commission proposes that priority should be given to the chosen court to decide on its jurisdiction. This departs from the current mechanistic "first seised" rule, under which the court second seised, even if it is the court the parties chose to determine any disputes when concluding their contract, must decline jurisdiction until the court first seised has decided whether or not it has jurisdiction.

Article 32(2) accordingly provides that where the court of a Member State has exclusive jurisdiction by virtue of article 23(1) of the Regulation, the "courts of other Member States shall have no jurisdiction over the dispute until such time as the court ... designated in the agreement decline[s] jurisdiction".

Although the regulation is silent on the issue, it is submitted that the court of a Member State allegedly given exclusive jurisdiction by such a clause could proceed under article 32(2). The validity of the clause (if in dispute) will be determined by the law of the Member State (allegedly) chosen.

The Commission has also recognised the commercial difficulties caused by tactical abuse of the court first seised rule (regardless of whether or not there is a jurisdiction/arbitration clause) and has proposed that where proceedings "involving the same cause of action and between the same parties are brought in the courts of different Member States" the court first seised must "establish its jurisdiction within six months except where exceptional circumstances make this impossible" (article 29(2)). However, no guidance is given as to what qualifies as "exceptional circumstances." This will almost certainly require clarification.

Of further note is the Commission's decision not to propose that the Regulation be amended to include special provisions dealing with whether or not a third party bill of lading holder is bound by any jurisdiction clause the bill of lading contains. Paragraph 13 of the European Parliament's resolution provided suggestions for this that were similar to the controversial provisions in the Rotterdam Rules dealing with third parties and jurisdiction clauses in relation to volume contracts.

Finally, the Commission has unsurprisingly not proposed to introduce into the regulation the general concept of forum non conveniens, which would give the courts of EU Member States the ability to decide whether or not to exercise jurisdiction as a matter of discretion. However, article 34 does give the court of a Member State discretion to stay its proceedings where prior proceedings in the court of a non-Member State are "within a reasonable time" expected to give rise to an enforceable judgment and the court is satisfied that it is "necessary for the proper administration of justice to [stay its proceedings]".

Under the ordinary legislative procedure, the proposal must be jointly adopted by the Council of the European Union and the European Parliament. The final approval is expected within two to three years.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.