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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. ______________________________ 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 2 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. ________________________________________ G:RA/IntL05/ch The Eleftheria:gb