Asymmetric jurisdiction clauses – the EU's highest court gives its view

On 27 February 2025, the EU's Court of Justice delivered its ruling on a case referred to it by the French Cour de Cassation concerning whether or not asymmetric jurisdiction clauses are valid as a matter of EU law; specifically, under Article 25(1) of the recast Brussels Regulation¹ (the "Recast"). In its judgment, the Court of Justice ruled that the clause in question was to be determined under EU law and that under EU law asymmetric jurisdiction clauses are valid provided they: (i) designate the courts of one or several EU Member States or Lugano Convention contracting states; (ii) are otherwise sufficiently precise to enable a court to ascertain whether it has jurisdiction; and (iii) are not contrary to the exclusive jurisdiction provisions under Article 24 concerning certain types of cases.

Asymmetric jurisdiction clauses (also referred to as unilateral or one-way clauses) are not uncommon in commercial agreements and are widely used in, for example, capital markets and syndicated loan transactions. In broad terms, an asymmetric clause is one that restricts one party to commencing proceedings in a particular forum should a dispute arise, whilst giving the other party the right to choose from a greater number of jurisdictions in which to do so.

These provisions are valid and enforceable under English law, as well as in other jurisdictions. Over the last 15 years, however, there have been a number of decisions of national courts in the EU, notably France, that have found such clauses unenforceable on the basis they were contrary to public policy or imprecise. Nevertheless, this has not dented their popularity with finance parties apparently keen to retain the flexibility inherent in these clauses.

Moreover, the Hague Judgments Convention (2019) to which the EU is a party and which is due come into force in the UK later this year, contemplates the enforcement of judgments issued following proceedings commenced pursuant to such clauses.²

Against this backdrop, it is timely to consider the Court of Justice's recent judgment concerning asymmetric jurisdiction clauses.

Background

The dispute concerned Società Italiana Lastre SpA ("SIL"), an Italian company, and Agora SARL, a French company, and whether the French courts had jurisdiction to hear an action on a guarantee brought by Agora against SIL.

The relevant jurisdiction clause stipulated that "the court of Brescia [(in Lombardy, Italy)] will have jurisdiction over any dispute arising from or related to this contract. [SIL] reserves the right to bring proceedings against the purchaser [i.e. Agora] before another competent court in Italy or elsewhere".

Agora brought proceedings against SIL in the French courts, which SIL challenged on the basis of the jurisdiction clause. The French courts at first instance, and upon appeal, rejected the challenge, on the basis that the jurisdiction clause was unlawful as it gave SIL a greater choice of jurisdiction than it gave Agora. The Court of Appeal in Rennes, France reached this conclusion without examining the validity of the agreement conferring jurisdiction as a matter of Italian law. The court reasoned that the jurisdiction agreement did not state the objective factors which the parties had agreed would determine the relevant court to be seised, meaning that it was contrary to the Recast's objective of promoting and maintaining foreseeability and legal certainty. SIL submitted that in doing so the court infringed Article 25(1) since the validity of an agreement conferring jurisdiction is a matter of the law of the Member State whose courts are designated in the jurisdiction clause, and therefore was a question of Italian law rather than French law.

On SIL's appeal, the French Cour de Cassation referred certain questions to the CJEU, in particular whether asymmetric jurisdiction clauses were generally inconsistent with Article 25(1) and whether the validity of a jurisdiction clause fell to be determined by EU law, or the law of the Member State designated by the agreement.

The Court of Justice's judgment

The Court of Justice held that the terms of a provision of EU law which does not contain any express reference to the laws of Member States for the purpose of determining its meaning and scope (such as Article 25(1)) must, as a general rule, be given an autonomous and uniform interpretation throughout the EU. Its interpretation must be established by reference to the usual meaning of those terms in everyday language, while also taking into account the context in which they are used and the objectives pursued by the legislation of which they form part. The Court of Justice held that, in relation to the Recast, it was apparent that the EU legislature had sought to adopt jurisdiction rules that were highly predictable and transparent in order to ensure legal certainty and facilitate the sound administration of justice.

The Court of Justice noted that, although the wording of the first sentence of Article 25(1) refers to the courts 'of a Member State', that provision cannot be interpreted as meaning that the parties must necessarily designate the courts of a single Member State. To impose such a limit would be contrary to the freedom of choice of the parties which, as reflected in Recital 19 of the Recast, should be respected, subject to certain limited exceptions laid out in Article 25(4) where exclusive jurisdiction is conferred on certain courts for cases concerning certain specified matters such as insurance and employment contracts.

On that basis, the Court of Justice decided that an asymmetric jurisdiction clause that gives one party a choice of courts could be valid under Article 25(1), as long as the clause provides objective and sufficiently precise factors that determine whether a particular court falls within its scope. However, importantly, the Court of Justice went on to note that the Recast only permits identification of a 'competent court' in an EU Member State or Lugano Convention state: the Recast does not regulate the jurisdiction of the courts of "third countries" so it is not possible to identify them as 'competent' within the meaning of the Recast. Accordingly, if a clause grants jurisdiction to a 'competent court' including courts outside the EU and Lugano Convention, the question of which courts may have jurisdiction may be a matter of the private international law rules of third states, which may diverge from the position under EU rules and therefore would not be sufficiently precise. Whether this means in effect that references in such clauses to 'competent courts' should be interpreted only to refer to the courts of EU Member States and Lugano Convention states is less clear.

Notwithstanding the above, it remains the case that Article 25 recognises that a jurisdiction agreement may be null and void on other grounds under national law.

Commentary

This decision clarifies that asymmetric jurisdiction clauses are not generally inconsistent with EU law: "the asymmetric nature of such an agreement does not render it unlawful". This is in fact consistent with a decision of the Court of Appeal of England & Wales in 2020, at a time when the Recast still applied to proceedings commenced in the UK.[1] In that case, the Court of Appeal suggested that an asymmetric jurisdiction clause could be viewed as an exclusive jurisdiction clause for claims brought by the party without the option, coupled with a separate non-exclusive jurisdiction agreement for claims brought by the other party who did have the option. To that extent, an asymmetric jurisdiction clause stipulating 'an English court or any other competent court' should generally be given effect by the English courts, although it is less clear whether an EU Member State court seised of a dispute in breach of such a clause would or should decline jurisdiction or stay those proceedings in favour of the English courts.

The judgment states that the validity of jurisdiction clauses under Article 25(1) are to be determined by applying autonomous rules derived from Article 25(1), and not the law of the Member State designated. On this basis, the Court of Justice appears to have considered that if parties stipulate courts in the EU or Lugano Convention contracting states such clauses should be enforceable.

The Court of Justice’s judgment, however, does leave certain questions unanswered. In particular, there is little or no guidance as to how an asymmetric jurisdiction clause referring to 'competent courts' should be interpreted. Should they be interpreted to refer only to courts within EU Member States or the Lugano Convention, on the basis that only these courts are 'competent' within the meaning of the Recast? The judgment contemplates the possibility that such a provision could be interpreted to refer to the courts of third countries, but notes that (if so) they would be contrary to the Recast. The upshot appears to be that, to the extent that asymmetric provisions concern the courts of third countries, the validity of those arrangements should fall to be decided as a matter of national law and local rules of private international law. Accordingly, the approach to enforceability of such clauses in EU Member State remains ambiguous and potentially non-uniform.

It will be interesting to see how the CJEU develops the limited EU jurisprudence in this area in the years to come, and also how the Hague Judgments Convention (2019) will have a practical impact on the enforcement of judgments in EU Member States arising from proceedings brought pursuant to an asymmetric provision.