Jurisdiction Clauses Since Akai
Australian Law Journal, Vol. 85, No. 2, 2013
28 Pages Posted: 16 Dec 2013
Date Written: December 16, 2013
With the enormous increase in international trade and commerce in recent years the risk for a party of being forced to litigate at great distance from home, with associated costs and inconvenience, has become very real. The inclusion of a jurisdiction clause in a contract, whereby parties agree to submit any disputes between them to a stipulated court, is therefore an important means of mitigating that risk. In an article which reviewed the Australian law on interpretation and enforcement of jurisdiction clauses up to 1997, shortly after the decision of the High Court in Akai v People’s Insurance Co Ltd , it was suggested that Australian courts had been occasionally unsupportive in their approach to such clauses. Three features of the jurisprudence were particularly noted: first, in interpreting jurisdiction clauses there was a tendency to find such clauses ‘non-exclusive’ rather than exclusive, secondly, even in the context of exclusive clauses, there was an excessive inclination to allow factors of convenience to preclude enforcement and thirdly, there appeared a willingness to allow Australian plaintiffs to circumvent such clauses by pleading breaches of Australian statutes – in particular the Trade Practices Act 1974 (Cth) (TPA) (now the Australian Consumer law (ACL) in Sch 2 to the Competition and Consumer Act 2010 (Cth)) (CCA)). By contrast, in other Australian decisions, it was noted that courts had given greater recognition to jurisdiction clauses. All three elements when considered together led to the observation that, at that time, Australian courts as a whole were less assiduous than they might have been in giving effect to jurisdiction clauses. Such an approach arguably led to an undermining of contractual expectations and greater uncertainty in international commerce as a major tool in limiting jurisdictional risk and exposure – the jurisdictional clause – was not fully appreciated. The important role of jurisdiction clauses in combating the practice of forum shopping was also arguably insufficiently appreciated. The purpose of this article is to assess whether the Australian record has changed since 1997, in particular, has the growing awareness of globalisation and methods of international dispute resolution such as arbitration had an impact on courts’ attitudes? The overall conclusion is positive: Australian courts in 2012 are generally more supportive of jurisdiction clauses than was the case in 1997 and a type of cross-fertilisation is occurring with the increasingly liberal approach to enforcement of arbitration agreements being adopted in cases involving jurisdiction clauses. For the purposes of analysis, the discussion in this article will focus first on the interpretation of jurisdiction clauses and then on their enforcement. Finally, reference will be made to some important other matters which have arisen in the Australian decisions concerning jurisdiction clauses.
Keywords: jurisdiction clauses, international trade
JEL Classification: K00, K33, K39
Suggested Citation: Suggested Citation