Post-Brexit - drafting tips for jurisdiction clauses

Since 1 January 2021, the rules governing the jurisdiction of disputes involving EU counterparties have changed.  This has implications for those drafting contracts because there are advantages to drafting a jurisdiction clause that falls within the Hague Convention on Choice of Court Agreements 2005. The advantages of bringing a dispute within the ambit of the Hague Convention are that: 

• the Courts of the Contracting States should comply with the parties' intentions by recognising the exclusive jurisdiction of the chosen Court; and 
• the resulting judgment should be recognised and enforceable in the Contracting States.

Drafting tips

1. The Hague Convention applies to exclusive jurisdiction agreements only.  Therefore non-exclusive jurisdiction clauses should be used with caution.  
2. The Hague Convention is not thought to apply to asymmetric jurisdiction clauses; where one party can determine the jurisdiction, but not the other. This uncertainty was recently emphasised in the obiter remarks of the Court of Appeal in Etihad Airways PJSC v Flother. It is prudent therefore to avoid drafting jurisdiction clauses that confer an advantage on one of the parties.
3. It is unclear whether an escalation process in which one party can elect to arbitrate (but not the other) amounts to an asymmetric jurisdiction clause.  
4. If the parties are using a complex escalation and dispute resolution mechanism (common in outsourcing or IT projects), it is worth checking whether these escalation provisions are evenly balanced when it comes to determining jurisdiction.