Key Takeaways
- Asymmetric jurisdiction clauses give rise to a real risk of parallel proceedings, and careful drafting is required to ensure that this only occurs in intended circumstances.
- The Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters now makes it easier for parties to enforce English Court judgments including those arising from asymmetric jurisdiction clauses in other Contracting States.
There have been two important recent developments for parties who use asymmetric jurisdiction clauses in their commercial contracts. First, the English Court of Appeal1 dispelled the concept of contracts being subject to a "floating jurisdiction" for resolving disputes, whilst highlighting the inherent possibility of parallel proceedings occurring in different countries when parties use asymmetric jurisdiction clauses. Second, as of 1 July 2025, English Court judgments that derive from such clauses are now more easily enforceable abroad than they have been post-Brexit, thanks to the enactment of the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the "Hague Judgments Convention"). We analyse these developments and their effect in this OnPoint.
The Court of Appeal decision
What is an asymmetric jurisdiction clause?
An asymmetric (or a one-way) jurisdiction clause provides that party A may sue party B in any competent jurisdiction, whereas party B is limited to suing party A in a specific jurisdiction.
These jurisdiction clauses are commonly used and often favoured by lenders who wish borrowers only to be permitted to bring proceedings in a specific jurisdiction. Lenders, however, often want the freedom to commence proceedings wherever they wish, but typically where the borrower's assets are located against which they could enforce a judgment.
The facts
Hipgnosis and Mr Barry Manilow entered into a Music Catalogue Agreement in March 2020 which provided for the payment of royalites and other receivables to Hipgnosis in return for an initial purchase price and an additional purchase price, which was payable in certain circumstances.
The Music Catalogue Agreement contained an asymmetric jurisdiction clause which provided for the exclusive jurisdiction of the English Courts to determine disputes under the contract, except that Mr Manilow could bring a claim against Hipgnosis in the Courts of California or New York relating to the purchase price. Hipgnosis agreed to submit to the exclusive jurisdiction of those Courts in relation to such claims.
Between August 2023 and March 2024, Hipgnosis made repeated demands for the payment of royalties. In response, Mr Manilow claimed that the additional purchase price was due and payable, and this justified the non-payment of royalties. Hipgnosis issued proceedings in the English Courts in August 2024 seeking, amongst other things, a declaration that Mr Manilow was not entitled to payment of any additional purchase price and an order that Mr Manilow pays the royalties to Hipgnosis.
Later in August 2024, Mr Manilow issued proceedings in Los Angeles making claims in respect of the additional purchase price. He also claimed that there had been fraudulent or negligent misrepresentations by Hipgnosis in the pre-contractual negotiations.
Mr Manilow subsequently successfully challenged the jurisdiction of the English Courts to hear the claim, and Hipgnosis appealed the decision to the Court of Appeal.
The Decision
The Court of Appeal agreed with Hipgnosis and found:
- The proceedings were properly commenced in the English Courts as Hipgnosis could only bring the claim there. The jurisdiction clause only contained a limited carve-out for Mr Manilow to pursue a claim in respect of the purchase price in other Courts, but this had been breached by Mr Manilow when bringing misrepresentation claims in Los Angeles.
- It is an inherent possibility of an asymmetric jurisdiction clause that there can be parallel proceedings.
- The jurisdiction of the English Court is determined at the date of issue of the proceedings. The Court stated: "The concept that the English court had jurisdiction when the proceedings were issued, but that was only "floating" and was lost in favour of California when the option was exercised, is heretical and contrary to authority."
- Mr Manilow's argument that the exercise of his option to sue in California trumped the exclusive jurisdiction clause overlooked the one-sided nature of the option which was only in favour of Mr Manilow.
- It would not exercise its discretion to stay the English proceedings in favour of the Los Angeles Courts, in part as it was not a more convenient forum in which to determine the dispute.
Practical implications
This case highlights that there is a real risk of parallel proceedings arising in multiple jurisdictions when using asymmetric jurisdiction clauses. Jurisdiction clauses should be carefully and precisely drafted to mitigate this risk, including by defining clearly which party has the benefit of the option and in respect of which issues. Further, lenders with the benefit of English asymmetric clauses may want to include wording in their agreements that requires the discontinuation of any existing proceedings should the lender choose to issue similar proceedings in another country.
However, in the absence of such wording, the Court provided clarity that once a claim is issued in the English Courts, the Court's jurisdiction would not simply be lost because a party with the benefit of an asymmetric clause later decides to issue a similar claim elsewhere.
The Hague Judgments Convention
One further consideration to which parties must have regard when drafting jurisdiction clauses is the ability to enforce any judgment made by the chosen court, and there has been a recent dramatic shift in the landscape for enforcing English judgments abroad.
The effect of the Hague Judgments Convention
The Hague Judgments Convention provides that a judgment given by a court of a Contracting State in respect of a qualifying dispute shall be recognised and enforced in another Contracting State (the "Requested State"), without a review of the merits of the judgment. Enforcement may only be refused on limited grounds, for example:
- Where the recognition or enforcement of the judgment would be manifestly incompatible with the public policy of the Requested State; or
- The judgment is inconsistent with a judgment given by a court of the Requested State in a dispute between the same parties.
It applies to judgments given on the merits of commercial and civil disputes (albeit there are certain exceptions) which were commenced after 1 July 2025.
The Hague Judgments Convention is becoming widely adopted. It came into force in the UK on 1 July 2025, and it has also entered into force in all EU Member States (excluding Denmark), Ukraine and Uruguay. It will further come into force in Albania and Montenegro on 1 March 2026, and Andorra on 1 June 2026. The U.S., Russia, Israel, Costa Rica, Kosovo and North Macedonia have all signed up to the Hague Judgments Convention but have not yet ratified it.
Practical implications
The Hague Judgments Convention will give contracting parties (in particular, those who use asymmetric jurisdiction clauses in their contracts) further comfort when choosing the English Courts to determine their commercial disputes, as judgments of the English Courts have now become more easily enforceable abroad. Whilst English Court judgments were readily enforceable in many countries post-Brexit under the 2005 Hague Convention on Choice of Court Agreements, it only applies to judgments that emanated from an exclusive jurisdiction clause. The Hague Judgments Convention goes further and also applies to judgments that derive from asymmetric or non-exclusive jurisdiction clauses.
The Hague Judgments Convention provides greater certainty and simplicity for parties who wish to enforce English Court judgments abroad. Enforcement time and costs will be reduced, as there will be no need for duplicative proceedings abroad, and parties will not need to worry about the sometimes unpredictable application of different local laws.
Footnote
1. Hipgnosis SFH 1 Limited v Barry Manilow and Another [2025] EWHC Civ 486
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.
