1. Student’s notes – educational purposes only
No responsibility assumed
Private International Law
Intro: A court seized by an interested party to an international agreement will
first decide whether or not it has jurisdiction to decide the case, which will be done
based on its own “jurisdiction rules”: the court can accept or decline the case.
Accepting the case, then the court will then decide which law is the governing law of
the contract, based on its own “conflict of laws rules”.
1) identify the potential countries - an international contract will necessarily
involve parties from different countries, assets located in different countries and
documentation providing for a choice of law (governing law of the contract) and/or a
choice of jurisdiction (where to litigate): these 4 elements are elements of
“connection”, ie they are the starting point to analyse the problem, because all
countries mentioned in the problem will potentially be a country where litigation
might take place.
2) pre-select some countries among those identified in the 1st step above,
excluding the others and explaining why you are excluding one or some of them
(the reason will be mainly because they haven’t got jurisdiction) - the second step
is to figure out which jurisdiction would accept the litigation to take place there,
which would be decided – by the courts of the relevant jurisdiction – according to the
“jurisdiction rules” of that particular jurisdiction itself.
To provide a comprehensive analyses to a client, a lawyer should be able to
present an analyses of each jurisdiction mentioned in the problem, but this will not be
the case in the exam, since we have studied only the jurisdiction rules of EU Member
States; therefore, we will probably be asked to provide an opinion as to where to sue
based on an analysis of 2 or 3 EU countries (not to mention that opinions about a
particular jurisdiction can only be provided by licensed lawyers of that jurisdiction).
* a court in Europe will accept or reject a case according to Brussels I
(jurisdiction rules), only applicable where the defendant is domiciled in the EU or in
an EEA State (if the defendant is not an EU-domiciled, then the court will look at its
own jurisdiction rules apart from Brussels I to decide if it has got jurisdiction – in
England, this “second set” of jurisdiction rules are the common law rules, which
would uphold a choice of law clause when reasonably justifiable or would consider
other factors indicating strong connection between the case and this country, such as
place of performance, place of negotiation, the currency used in the contract: there
having a factor of this type, it is likely that an English court would not decline the
case).
Under Brussels I, the possibilities of an European court having jurisdiction are
very broad, so that potentially all EU countries mentioned in the problem question
(except those with which the only element of connection is the fact that some of the
debtor’s assets are located there [this is not a cause of jurisdiction, unless the asset

2. itself is the subject-matter of the action – art. 6 (4) and art. 22]) will be a possible
place to start litigation, because a country specified by a choice of jurisdiction
clause, or where the defendant is domiciled, or where the contractual performance
has to take place, or where a tortious act has occurred (for claims in tort obviously)
could be said to have jurisdiction (“concurrent jurisdiction”), unless the specific issue
gives rise to a case of “exclusive jurisdiction” (which seems unlikely in a problem
question – cases of exclusive jurisdiction are cases about land, public register, patents
and trade mark, company law issues – Brussels I, art. 22).
* Brussels I (EU jurisdiction rules):
A) if there is a choice of jurisdiction (art. 23 – it can be an
express choice or an implicit choice, ie implied by uses and practices in the particular
sector/business): in order to be allowed to chose a jurisdiction in any EU-country, it
suffices that one party to the agreement is domiciled in one of the Member States
(then they can chose any EU Member State).
The evaluation as to which jurisdiction to chose generally
involves where the assets are located, the quality and costs of legal services, the
convenience of harmonizing the forum with the probable governing law. Unlike the
choice of law (as will be seen below), the contract cannot be split into different
jurisdictions (eg disputes around certain clauses will be dealt with by the courts of
Country A and the remaining clauses by the courts of Country B = this is not
permitted), BUT the choice of jurisdiction can be multiple (eg disputes arising from
the contract will be judged in Country A or Country B), which enables “forum
shopping”, since the specification will occur only when it becomes necessary to do so,
so that it is not necessary to speculate in advance about which forum will be the most
convenient; this can be done when a dispute needs to be brought before the court.
* lenders normally prefer multiple and non-exclusive clauses,
because if court intervention is necessary, it is very likely that that intervention is due
to a default by the borrower, so that a multiple and non-exclusive clause will enable
the lender to chose at the convenient time the most convenient place to sue. It does
not necessarily follow that a lender can sue a borrower in a country even when it is
agreed in their contract that the borrower submits to the jurisdiction of that court: this
will primarily be a matter for the exact rules of jurisdiction in that country’s courts.
* if the “choice of jurisdiction” clause benefits only one party
(eg “the borrower submits himself to the courts of France”), then that party can
choose another country whose courts would also have jurisdiction as if no choice had
been made (KURZ v STELLA MUSIC case – see summary below). In order to
cover the situation where the lender in fact prefers to sue in a country not included in
the jurisdiction clause, the clause should expressly state to be non-exclusive, which
enables a lender to go to the courts of the country in question, assuming its
jurisdiction rules permit, without the obstacles that he has made an “exclusive choice”
of other courts (it can be advantageous to litigate in a jurisdiction in which the
defendant is not present and where he is unlikely to appear to defend the case: in this
event, the plaintiff will normally obtain a judgment in default).
B) if there is no choice (arts. 2-7): 1) the country where the

3. defendant is domiciled (art. 2);
* if there are two or more defendants: either country of
domicile (art. 6);
* under English Law, domicile is where a company has its
central administration or a registered office;
2) the country where
performance has to take place. In a loan contract, repayment can be regarded as the
characteristic performance of the agreement and shall be made in the lender’s place of
business (even when the defendant is denying the existence of the contract, because
the jurisdiction will be determined as the contract actually exists – TESAM
DISTRIBUTION v SHUH MODE TEAM case – see summary below). Moreover,
art. 5 of Brussels I states that, in the case of a contract for the provision of services,
the courts of the country where the services were provided are to have jurisdiction.
3) the country where tort
took place, for claims in tort.
* if the problem question brings a connection with New York,
it seems enough to know that New York (although it is “a popular forum in the
market” because, as England, it is famous for its courts being prone to uphold and
interpret contracts as they were intended and expressed by the parties) might not be a
good strategy as a choice of where to litigate, because: (a) the assets will probably be
in Europe and New York is not part of the Brussels I Convention, therefore a decision
made in New York would not be “automatically enforced” in Europe based on art. 33
of Brussels I, which provides for the “principle of free movement of judgments for
enforcement purposes” (see below); (b) New York works on “defendant connection”,
so that you can only sue in New York if the debtor company has a business presence
there or when it has appointed an agent for service to receive legal notices or
processes on the company’s behalf; and (c) you, as a City lawyer advising on English
Law is not allowed to give advice on New York Law, which should be obtained by
the client from a New York licensed law firm. Therefore, New York will be excluded.
* other jurisdiction rules under Brussels I: a) “lis alibi
pendens” rule: art. 27 Brussels I: if a proceeding has been started in one jurisdiction,
another case on the same dispute (same parties, same contract) cannot run in another
jurisdiction: the court later seized will have to stay the case until the court first seized
decides about its own jurisdiction (ERICH GASSER v MISAT – ECJ case):
If the court 1st seized: Then the later seized court will:
decline jurisdiction lift the stay and decide about its own jurisdiction
accept jurisdiction decline jurisdiction in favour of the 1st seized
* if the proceeding in the
st
court 1 seized was commenced in breach of a choice of jurisdiction
clause, the courts of the chosen jurisdiction are not allowed to issue an
injunction to compel the plaintiff to give up of that proceeding
(TURNER v GROVIT – ECJ case). Instead, the court 1st seized have

4. to decide first if it has or has not jurisdiction, even where the 1st
proceeding has been begun in bad faith, to frustrate the other party’s
intention to initiate proceedings in the “correct” country
(PRIMACON case)  options to the lender: a) resign itself to losing
the benefit of the agreed jurisdiction clause and litigate in the
jurisdiction of the borrower’s choice; b) fight the jurisdiction issue in
the court first seized (with the consequent delay and expenses); or c)
settle the case.
* if the lender had
included in the contract a jurisdiction clause in favour of the courts of a
non-EU country, Brussels I art. 27 would not apply and the lender
would then be able to commence proceedings in the “correct” court
even before the court 1st seized by the counterparty has decided about
its own jurisdiction, BUT the lender would lose the advantage of art.
33 of Brussels I (free movement of judgments for enforcement
purposes). England: Notwithstanding what was just said, a plaintiff is
prohibited from bringing a case in England where he has obtained
judgment on the same case in another country and that first judgment
is enforceable in England (Civil Jurisdiction and Judgments Act -
CJJA 1982, s. 34): where the plaintiff lost the case abroad, he may be
barred by the common law doctrine of estoppel.
b) company law
issues: if the company is European, then issues such as the validity of
the companies’ constitution and the validity of a resolution passed by
its board of directors, can only be judged by the courts of the country
where the company was incorporated: art. 22 (2). BUT this rule only
applies to cases “principally concerned with […] complex company
matters”, not when a company law issue is barely incidental, especially
where there is a choice of jurisdiction in the contract and the case is
primarily a contractual dispute. Therefore, the provision is to be
interpreted in a narrow way (BUG v JP MORGAN – ECJ case).
3) having identified possible forums, the governing law of the contract will be
one of the most relevant aspects for deciding where to sue (alongside the
conditions of the forum itself and the enforcement issues): the governing law of
the contract will be that resulting from an analysis of the “conflict of laws rules” of a
particular country. In EU-countries, those rules are substantiated in Rome I (for
contractual relationships) or in Rome II (for tort claims). Rome I and Rome II are the
EU conflict of laws rules and, therefore, in deciding which law will govern a contract
or a non-contractual relationship, European courts will apply Rome I or Rome II,
regardless where the parties are from and which law will result as being the governing
law.
* Rome I rules:

5. A) if there is a choice of law clause in the agreement: the
governing law will be the chosen law (art. 3, § 1); the parties to the agreement have
freedom to change the clause at any time (§ 2);
* to avoid uncertainty, the contracting parties can specify a
choice of law in their contracts. To decide which law to choose, the parties (or that
party which has more bargaining power, usually the lender in term loan agreements)
will normally prefer the law of the country: (a) to which they are more familiar; (b)
whose political future does not represent a threat to the contract being ultimately
effected; (c) that will probably interpret the agreement as intended and expressed (this
is why New York and England are “popular” in the “market”); (d) that will probably
be the forum of any proceedings that might take place, in order to assure that judges
will also be familiar to that law, which up to an extent can prevent uncertain
outcomes.
* it appears advisable not to attempt to stabilize the choice of
law, ie having a clause in the agreement to say that future changes in the law will not
apply to that relationship: this can be interpreted as an absence of choice at all. The
same would apply to a clause alternating the choice according to a specified
condition, such as a choice depending on where the case will be litigated.
Notwithstanding this, it is perfectly possible to establish that certain clauses of the
contract will be governed by Law X whilst the remaining clauses by Law Y, which
would enable the parties, for example, to include a penalty clause in the agreement,
which under Law Y would be upheld, but that under Law X would be void.
Therefore, the most appropriate wording of the clause would be the simplest way:
“this contract shall be governed by English Law”.
B) if there is not a choice of law: 1) country of residence of
the service provider (art. 4, § 1): a bank providing a loan facility for a borrower can
be considered a service provider, so that the governing law will be the law of the
country where the bank is domiciled (ie, where the bank has its central administration
or a branch at the time the contract was signed – art. 19);
2) place where the
property is located – lex situs (for contracts relating to rights in rem in immovable
property);
3) residence of the party
required to provide the characteristic performance of the contract (although
according to the Giuliano-Lagarde Report, in a banking contract it is normally the
bank which effects the characteristic performance of the contract, it can be said that,
in a loan agreement, the obligation to repay is the characteristic performance of the
contract, therefore the residence of the borrower will be the place that will determine
the governing law, because under English Law at least, the borrower should seek out
his creditor to repay the borrowing);
* the mutual obligations of an assignor and an assignee under a
voluntary assignment of a debt are governed by the law which governs the contract of
assignment. The law governing the debt being assigned determines whether it can be

6. assigned and the relationship between the debtor and the assignee (art. 12).
* Rome II (only if the case is a claim in tort, for example a charge for
negligent misstatement)
A) if there is a choice of law (before or after the event – it will
arise “before” the event when the parties anticipate the possibility of suing in tort): the
governing law will be the chosen law (art. 14);
B) if there is no choice (art. 4): 1) if the parties are from
the same country: the law of that country will be the governing law (regardless where
the damage occurred);
2) if the parties are from
different countries: the law of the country where the damage occurred will be the
governing law;
3) BUT, if it is clear that
the tort is connected with a 3rd country and not with the country of both parties’
residence nor with the country where damage took place: the law of that 3rd country
will be the governing law.
4) enforcement: where are the assets? Brussels I, art. 33: “principle of free
movement of judgments”: a decision from Member State A can be easily enforced in
Member State B (only a minimum procedure is required), and there may be pre-
judgment attachment (eg: an injunction to freeze assets): this can be required in
Member State B while the main proceedings run in Member State A, provided that the
remedy is available in Member State B and that the claimant satisfies the rules of
Member State B regarding pre-judgment attachment.
LINKS:
Rome I: http://www.legislation.gov.uk/ukpga/1990/36/schedule/1
Rome II: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?
uri=OJ:L:2007:199:0040:0049:EN:PDF
Brussels I: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?
uri=OJ:L:2001:012:0001:0023:en:PDF
RELEVANT CASES:

7. SUMMARIES BY WESTLAW:
Kurz v Stella Musical Veranstaltungs GmbH
Summary: Jurisdiction clause; non-exclusive jurisdiction agreed; effect on
application of Brussels Convention
Abstract: Parties to a contractual agreement could agree that the English courts
would have jurisdiction and this did not offend the Brussels Convention of 1968
Art.17 . P lived in England and D was in Germany. They entered into joint ventures to
stage musicals. P provided the money for D, a German company, to stage a musical in
Germany in return for a share of the profits. The agreement was expressed to be
governed by English law and contained a clause providing for non- exclusive
submission to the jurisdiction of the English courts. P claimed that moneys were
owing to him and served a writ endorsed with a statement of claim on the defendant
in Germany. D gave notice of intention to defend, sought discovery of documents
referred to in the statement of claim, and was granted an extension of time for filing a
defence. D applied by summons under Rules of the Supreme Court Ord.12 r.8 to set
aside the writ on the ground that the court had no jurisdiction to determine the matter
under the Civil Jurisdiction and Judgments Act 1982 and the Convention on
Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968
Art.17 and Art.18 , as set out in Sch.1 to the Act. Held, that (1) D had entered an
appearance solely to contest the jurisdiction of the court, and the applications for
discovery and extension of time to file a defence were not inconsistent with that. The
court therefore had no jurisdiction under Art.18; (2) however, D's summons would be
dismissed as the parties were domiciled in contracting states and had entered into an
agreement coming within Art.17 for the English courts to have jurisdiction over
disputes. Under Art.17, jurisdiction was a question of the intention of the parties and
"exclusive jurisdiction" did not limit their choice to a single jurisdiction, but meant
that their choice was to have effect to the exclusion of the jurisdictions that would
otherwise be imposed by earlier articles of the Convention. The court therefore had
jurisdiction.
Tesam Distribution Ltd v Schuh Mode Team GmbH
Summary: Jurisdiction; question as to whether contract existed
Abstract: T appealed against the setting aside of service of a writ outside the
jurisdiction. T had claimed damages for breach of contract by S and for inducing
breach of that contract by S's bank (B). S and B were both domiciled in West
Germany. B claimed that as there was no contract between themselves and T, T could
not rely on the Brussels Convention 1968 Art.5 to establish the jurisdiction of the
English courts. Held: Appeal allowed. Following Effer SpA v Kantner (C38/81)
[1982] E.C.R. 825 the disputed existence of a contract did not of itself deny
jurisdiction under Art.5. However, neither did mere assertion of its existence render
Art.5 operative. The plaintiff had to show a good and arguable case. On the facts in
this case T was able to achieve this.