Factual and Procedural Background
The Plaintiff, a bank registered in Mauritius ("Company A"), entered into a facility agreement dated 9 November 2010 with the First Defendant ("Company B"), a Mauritian registered company, under which a trade finance banking facility was established for up to US$10 million. The Second Defendant ("Company C"), the parent company of Company B and registered in India, provided guarantees for the obligations under this agreement. The facility was later amended to increase the limit to US$20 million, with corresponding guarantees from Company C.
Despite these arrangements, Company B defaulted on repayments due in August 2012. Subsequent negotiations led to an Amendment and Restatement Agreement ("ARA") on 11 October 2012, which replaced and restated the original facility agreement with revised terms, including a new repayment schedule and interest amounts. The ARA included a Restated Facility Agreement ("RFA") governed by English law with an exclusive jurisdiction clause conferring jurisdiction to the English courts.
The Plaintiff issued a claim in England for approximately US$15 million plus interest against Company B and Company C for outstanding amounts. The Defendants applied to set aside the claim and stay proceedings on the grounds that the English court lacked jurisdiction, challenging the validity of the jurisdiction clause under Mauritian law.
Legal Issues Presented
- Whether the English court has jurisdiction to try the claim under the jurisdiction clause in the Amendment and Restatement Agreement.
- Whether the governing law of the jurisdiction clause is English law or Mauritian law.
- Whether the jurisdiction clause is valid and enforceable under the applicable law.
- Whether the Defendants can successfully challenge jurisdiction based on the alleged one-sidedness and invalidity of the jurisdiction clause.
- If the jurisdiction clause is invalid, whether jurisdiction can be established by service of process under an independent provision.
Arguments of the Parties
Defendants' Arguments
- The jurisdiction clause (clause 24.1) remains governed by Mauritian law despite the English governing law clause (clause 23), because the parties amended rather than replaced the original agreement.
- Under Mauritian law, based on French jurisprudence, the jurisdiction clause is invalid as it is one-sided, allowing the Plaintiff to sue in any jurisdiction while binding the Defendants to English courts only.
- Alternatively, if English law governs the jurisdiction clause, it is too one-sided and incompatible with principles of equal access to justice.
- The Plaintiff’s interpretation of clause 24.1(c) improperly confers on the Plaintiff the right to sue in any court worldwide, which is unreasonable and invalid.
- The validity of the service of process clause (24.2) depends on the validity of clause 24.1 and is therefore also invalid.
Plaintiff's Arguments
- The Amendment and Restatement Agreement replaced the original facility agreement, thereby validly changing the governing law of the jurisdiction clause to English law.
- English law permits parties to amend the governing law of a contract, including jurisdiction agreements, and the parties’ intention to apply English law to the entire agreement, including the jurisdiction clause, is effective.
- The jurisdiction clause is valid under English law, including the one-sided nature of clause 24.1, which is common and enforceable in financial markets.
- Clause 24.1(c) does not confer jurisdiction on foreign courts where none would otherwise exist but preserves the Plaintiff’s right to sue in any court of competent jurisdiction.
- Clause 24.2 is an independent provision allowing service of process in England and remains valid even if clause 24.1 were invalid, thereby establishing jurisdiction through service.
- The Defendants have not discharged the burden to show that an alternative forum is clearly more appropriate than England.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| James Miller and Partners Limited v Whitworth Street Estates (Manchester) Limited [1970] AC 583 |
Parties may vary the governing law of a contract by subsequent agreement or conduct. |
Supported the conclusion that parties can amend the governing law of a contract, including jurisdiction clauses. |
| Armar Shipping Co Ltd v Caisse Algerienne [1981] 1 WLR 207 |
Proper law of a contract must be fixed at the time of contract formation; retrospective changes problematic. |
Distinguished retrospective changes from prospective changes; prospective changes to governing law are permissible. |
| Iran Vojdan [1984] 2 Lloyds Rep 380 |
Rejected the concept of a "floating proper law" for contracts. |
Endorsed the need for a proper law from the start; supported the view that the proper law can be prospectively changed. |
| BP Plc v National Union Fire Insurance Co and Others [2004] EWHC 1132 |
Parties can agree to empower one party to vary the contract, including the governing law, prospectively. |
Supported the validity of prospective changes to governing law by agreement. |
| Canada Trust Co v Stoltzenberg (No 2) [1988] 1 WLR 547 |
Threshold for establishing foreign law on interlocutory applications is a good arguable case. |
Applied to assess the Defendants' burden on foreign law on validity of jurisdiction clause under Mauritian law. |
| Schuler (L) A.G. v Wickman Machine Tool Sales Ltd [1974] AC 235 |
Interpretation of contracts must consider whether a construction leads to an unreasonable result. |
Used to reject the Defendants' unreasonable construction of clause 24.1(c). |
| NB Three Shipping Ltd v Harebell Shipping Ltd [2005] 1 Lloyds Rep 509 |
Beneficiary of a one-sided jurisdiction clause may use it defensively as well as offensively. |
Referenced in construing the one-sided jurisdiction clause at issue. |
| Law Debenture Trust Corporation plc v Elektrim Finance BV [2005] EWHC 1412 |
Similar principle on the use of one-sided jurisdiction clauses. |
Referenced as supporting authority for enforcement of asymmetric jurisdiction clauses. |
| Lornamead Acquisitions Limited v Kaupthing Bank HF [2011] EWHC 2611 |
Construction of clauses similar to clause 24.1 in financial agreements. |
Confirmed the court’s interpretation of clause 24.1 as valid and enforceable. |
| Spiliada Maritime Corp v Cansulex [1987] AC 460 |
Burden on defendant to show an alternative forum is clearly more appropriate. |
Applied to assess whether the court should exercise its jurisdiction despite competing fora. |
Court's Reasoning and Analysis
The court first addressed the Defendants' argument that the jurisdiction clause remained governed by Mauritian law because the parties amended rather than replaced the original agreement. The court rejected this on the basis that the Amendment and Restatement Agreement replaced the original facility agreement with a new one, discharging prior obligations and creating a fresh agreement governed by English law. This conclusion was supported by the parties' expressed intention to "replace" the original agreement and the tripartite nature of the new agreement.
The court then considered whether the parties could validly change the governing law of their contract, including the jurisdiction clause, by amendment. It found that English law permits prospective changes to the governing law by agreement, consistent with contractual autonomy and the Rome 1 Regulation. The court distinguished this from the concept of a "floating proper law," which is impermissible.
Regarding the Defendants' challenge to the validity of the jurisdiction clause under Mauritian law, the court noted the controversy and uncertainty in Mauritian jurisprudence but concluded there was a good arguable case that the clause would be upheld.
Turning to the construction of clause 24.1, the court rejected the Defendants' interpretation that it allowed the Plaintiff to sue anywhere regardless of jurisdictional competence. Instead, clause 24.1(c) was construed as preserving the Plaintiff’s right to sue in any court that has jurisdiction, without conferring new jurisdiction where none exists. The court also rejected the claim that the clause was invalid due to its one-sided nature, citing established authority confirming the validity of asymmetric jurisdiction clauses in financial agreements.
The court further held that clause 24.2, providing for service of process in England, is independent of clause 24.1 and remains valid even if clause 24.1 were invalid. Service on the Defendants’ designated agent in England thus established jurisdiction.
Finally, the court considered whether the Defendants had discharged the burden of showing that an alternative forum was clearly more appropriate. The Defendants had not met this burden, and England was found to be a clearly appropriate forum, especially given the agreement that England is the forum conveniens.
Holding and Implications
The court DISMISSED the Defendants' application to set aside the claim form and stay proceedings for lack of jurisdiction.
As a result, the English court retained jurisdiction over the claim. The decision confirms that parties may validly amend and restate contracts to change the governing law of jurisdiction agreements, and that asymmetric jurisdiction clauses commonly used in financial markets are enforceable under English law. The ruling also affirms the independence and effectiveness of service of process provisions in establishing jurisdiction. No new precedent was established beyond the application of existing principles to the facts of this case.