Download Discretionary non-exercise of jurisdiction

Discretionary non-exercise of jurisdiction
Foreign jurisdiction clauses
The Eleftheria
[1970] P 94 (English High Court)
An action for damages arising out of the carriage of goods on the Greek registered
ship “Eleftheria” was commenced in England by the plaintiff cargo owner against the
defendant ship owner. A term of the contract between the parties provided that all
disputes arising under the contract should be decided in Greece. Upon application by
the defendant, Brandon J ordered a stay of proceedings. His Lordship’s judgment (at
pp 99-100) contains a summary of the principles which govern whether an application
for a stay of proceedings should be granted where proceedings are commenced in the
forum in breach of an exclusive foreign jurisdiction clause. These principles are as
follows:
1. The court is not bound to grant a stay, but has a discretion whether to do so
or not.
2. The discretion should be exercised by granting a stay unless “strong
cause” for not doing so is shown by the plaintiff.
3. In exercising its discretion the court should take into account all the
circumstances of the particular case including (where appropriate):
(a) In what country the evidence on the issues of fact is situated, or more
readily available, and the effect of that on the relative convenience and
expense of trial as between the forum and the agreed foreign court;
(b) whether foreign law applies and, if so, whether that law differs from
the lex fori in any material respect;
(c) with what country either party is connected, and how closely;
(d) whether the defendant genuinely desires trial in the foreign country, or
is only seeking a procedural advantage in making application for a
stay; and
(e) whether the plaintiff would be prejudiced by having to sue in the
foreign court because the plaintiff would (i) be deprived of security for
the claim, (ii) be unable to enforce any judgment obtained, (iii) be
faced with a time-bar not applicable in the forum; or (iv) for political,
racial, religious or other reasons be unlikely to get a fair trial.
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Notes
1.
In Incitec Ltd v. Alkimos Shipping Corporation (2004) 206 ALR 558, a decision of the
Federal Court of Australia, Allsop J observed (at p 565) that the principles stated by Brandon J
in The Eleftheria “can be taken as the law in Australia”. Allsop J added (at p 566):
The question is one of the exercise of a discretion in all the circumstances, but
recognising that the starting point is the fact that the parties have agreed to
litigate elsewhere, and should, absent strong countervailing circumstances, be
held to their bargain.
G:RA/IntL05/ch The Eleftheria:gb
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2.
In the context of an application for a stay of proceedings brought in breach of an exclusive
foreign jurisdiction clause, it is inappropriate for the forum court to enter into any comparison
between the quality of justice administered in the forum and in the foreign country. In The El
Amria [1981] 2 Lloyd’s Rep 119, Brandon LJ (with whom the other members of the English
Court of Appeal agreed) said (at p 126):
[F]or [the] court to investigate such a matter and pronounce a judgment on it is
not consistent with the mutual respect which the courts of friendly states, each of
which has a well developed system for the administration of justice, owe, or
should owe, to each other.
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G:RA/IntL05/ch The Eleftheria:gb