Unilateral Jurisdiction Clauses: The Case for Invalidity, Severability or Enforceability

Abstract

This article presents a study of the so-called ‘unilateral’ (‘optional’, ‘hybrid’) jurisdiction clauses combining arbitration and choice of court options, which business tends to favour as such clauses seek to designate a method of dispute resolution that provides a more favourable position for one of the parties to an agreement and ensure better enforcement against a debtor’s assets. However, there are a growing number of jurisdictions where courts have issued decisions that declare such clauses either invalid or as having a significant defect. This study makes a review of both common law and continental jurisdictions and focuses particularly on a number of decisions issued recently in continental jurisdictions making an assessment of the arguments that are typically employed by courts in order to find that a unilateral clause is invalid. Finally, this study proposes a method of interpretation of unilateral jurisdiction clauses which favours their validity or, where there is a significant defect, proposes partial invalidity and severance instead of invalidity of the entire clause.

Keywords: conflict of laws; private international law; jurisdiction; arbitration; Brussels I; hybrid clauses; unilateral clauses; international civil litigation; transnational litigation

JEL Classification: K41; K33