Factual and Procedural Background
The Defendant applied on 17 September 2019 for a declaration under CPR Part 11 that the court lacks jurisdiction or should not exercise jurisdiction over a claim concerning enforcement of a personal guarantee dated 8 April 2018 ("the Personal Guarantee"). This guarantee related to a loan facility agreement of the same date ("the Facility Agreement") between the Claimant and Company A, the principal debtor.
The Personal Guarantee contained clause 17, detailing governing law and jurisdiction, including provisions for arbitration under the LCIA Arbitration Rules and an option for the Claimant to require disputes be settled exclusively by the DIFC courts via a Litigation Notice. The Facility Agreement contained a similar clause.
The Claimant alleged that Company A defaulted on its repayment obligations in October 2018, making the Defendant liable under the Personal Guarantee for approximately £2.3 million.
On 28 March 2019, the Claimant sent the Defendant a letter notifying that the dispute would be settled exclusively by the English courts, constituting a Litigation Notice under clause 17.3 of the Personal Guarantee.
The claim was issued on 16 April 2019, and service was effected by alternative means with deemed service dated 2 August 2019. The Defendant filed an acknowledgment of service on 19 August 2019, indicating an intention to defend the claim and to contest jurisdiction.
The Defendant requested an extension of time for filing a Defence until 17 September 2019, which was granted. The Defence was served on 17 September 2019, including grounds contesting the English court’s jurisdiction based on the exclusive jurisdiction clause for the DIFC courts and arbitration provisions in the agreements.
No formal application was made to extend time for challenging jurisdiction.
Legal Issues Presented
- Whether the Defendant submitted to the jurisdiction before making the application;
- If not, whether an extension of time should be granted for making the application;
- Whether, on the proper construction of clause 17.3, the reference to "the English Courts" should be construed as referring to the DIFC courts;
- Whether the Letter sent by the Claimant was a Litigation Notice;
- If the Letter was not a Litigation Notice, whether the Claimant is entitled to bring the claim in the English courts;
- If the Letter was a Litigation Notice, whether the Claimant is nonetheless entitled by reason of clause 17.3(c) to bring the claim in the English courts.
Arguments of the Parties
Defendant's Arguments
- The English courts do not have jurisdiction as the parties agreed the DIFC courts have exclusive jurisdiction under clause 17.3(b) of the Facility Agreement.
- The Claimant’s Litigation Notice purportedly triggered exclusive jurisdiction of the DIFC courts, making the English courts incorrect forums.
- The Defendant contends the courts of England and Wales have no jurisdiction, and clause 17.3(c) is not applicable to prevent this.
- Alternatively, if clause 17.3 is ambiguous, arbitration under clause 17.2 is the proper mechanism to decide jurisdiction, not litigation in English courts.
Claimant's Arguments
- The Defendant submitted to English jurisdiction by filing an acknowledgment of service and seeking an extension of time for the Defence.
- The Letter sent was a valid Litigation Notice under clause 17.3(a), thereby electing the English courts as the exclusive forum.
- Clause 17.3(c) allows the Claimant complete freedom to bring proceedings in any jurisdiction with jurisdiction, including English courts, regardless of the Litigation Notice.
- Precedent cases support the validity of asymmetric jurisdiction clauses allowing the lender/Claimant to sue in multiple jurisdictions.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Global Multimedia v Ara Media [2007] 1 All ER (Comm) 1170 |
Objective test for submission to jurisdiction; conduct must be unequivocal to amount to submission. |
The court applied the test to determine that the Defendant’s conduct did not amount to unequivocal submission to English jurisdiction. |
| SMAY Investments v Sachdev [2003] EWHC 474 |
Seeking extension of time for Defence does not necessarily amount to submission to jurisdiction. |
Supported the conclusion that the Defendant’s extension request was not unequivocal submission. |
| Texan Management Limited v Pacific Electric Wire & Cable Company Limited [2009] UKPC 46 |
Failure to challenge jurisdiction within time may lead to deemed submission, but extensions can be granted. |
Informed the court’s approach to time limits and extensions for jurisdiction challenges. |
| Sawyer v Atari Interactive Inc. [2005] EWHC 2351 |
Power of court to extend time for jurisdiction challenges under CPR Rule 3.1(2)(a). |
Supported the court’s discretion to grant relief from sanctions and extend time. |
| Mouly v AIG Europe [2016] EWHC 1794 (QB) |
Considerations for relief from sanctions regarding delay in procedural compliance. |
Used as a comparative case for delay length and prejudice in granting relief. |
| Mauritius Commercial Bank Ltd v Hestia Holdings Ltd [2013] EWHC 1328 (Comm) |
Interpretation of asymmetric jurisdiction clauses benefiting one party allowing multiple jurisdictions. |
Highly persuasive precedent supporting the Claimant’s construction of clause 17.3(c). |
| Lornamead Acquisitions Limited v Kaupthing Bank [2011] EWHC 2611 (Comm) |
Enforcement of asymmetric jurisdiction clauses allowing lender to renounce exclusive jurisdiction. |
Supported the Claimant’s position that the claimant may bring proceedings in multiple jurisdictions. |
Court's Reasoning and Analysis
The court first considered whether the Defendant had submitted to the jurisdiction by filing an acknowledgment of service and requesting an extension for the Defence. Applying the objective test from Global Multimedia and SMAY, the court found these acts equivocal and not unequivocal submissions to jurisdiction, especially as the Defendant explicitly contested jurisdiction in the acknowledgment of service.
The court noted the failure to apply within time to challenge jurisdiction did not amount to irrevocable submission, as extensions could be granted, preserving the Defendant's right to contest jurisdiction.
Regarding the extension of time to challenge jurisdiction, the court exercised discretion to grant relief from sanctions, despite the delay being significant (over 13 weeks), because the Claimant was neutral, no prejudice was shown, and the delay did not impact proceedings or other court users.
On construction of clause 17.3, the court found the literal wording self-contradictory, with a single reference to "the English Courts" inconsistent with multiple references to "the DIFC courts." The court corrected the mistake, construing the reference to "the English Courts" as "the DIFC courts," consistent with contractual intention and established principles for correcting clear mistakes in written instruments.
Both parties agreed the Letter constituted a Litigation Notice under clause 17.3(a). The Defendant argued this election bound the parties to exclusive jurisdiction of the DIFC courts and precluded arbitration or English court proceedings. The Claimant relied on clause 17.3(c) to argue it retained freedom to bring proceedings in any jurisdiction, including English courts.
The court analyzed relevant precedent on asymmetric jurisdiction clauses, notably Mauritius Commercial Bank and Lornamead, which upheld clauses conferring exclusive jurisdiction on one party but allowing the other party to sue in multiple jurisdictions. The court rejected the Defendant’s arguments that the Litigation Notice procedure negated the Claimant’s freedom to choose jurisdiction or that the clause was inconsistent.
Ultimately, the court concluded that clause 17.3(c) permits the Claimant to bring proceedings in the English courts despite the Litigation Notice, and the Defendant’s application to declare lack of jurisdiction was dismissed.
Holding and Implications
The court DISMISSED the Defendant’s application for a declaration that the English courts lack jurisdiction or should not exercise jurisdiction.
The decision confirms that, under the contractual framework and established case law, asymmetric jurisdiction clauses may allow the claimant to elect to bring proceedings in multiple jurisdictions notwithstanding an exclusive jurisdiction election procedure. The court granted relief from sanctions and extended time for the Defendant to challenge jurisdiction, preserving procedural fairness. No new precedent was set; the ruling applies the established principles to the facts of this case, affecting only the parties involved.