Breach of an Arbitration or Exclusive Jurisdiction Clause: The Legal Remedies if it Continues

Abstract

THIS ARTICLE considers the remedies available to a party1 where an arbitration or exclusive jurisdiction clause has been breached by the commencement of foreign proceedings and, in particular, what the claimant can do where the usual remedies (applying for a stay of the foreign proceedings in the foreign court itself and/or an anti-suit injunction in the English courts against the counterparty continuing in the foreign proceedings) are ineffective. However, before proceeding with this analysis it is important to place the arbitration/jurisdiction clause in context and consider some preventative remedies. In international commercial transactions it has proved increasingly important that all agreements include a dispute resolution provision. Two clauses vital in any dispute resolution provision are the arbitration/jurisdiction and choice of law clauses. These clauses are interrelated: the arbitration/jurisdiction clause cannot competently be drafted until the governing law has been determined because it is that legal system which will generally govern its interpretation. Throughout this article it is assumed that English law2 has been chosen to govern the agreement and that an English arbitral seat or English courts are chosen. In many cases there will be advantages in opting for international arbitration, as opposed to national courts, to resolve an international commercial dispute. Arbitration generates an arbitral award that may be more easily enforceable against a counterparty's transnational assets than a court judgment, or a party (especially a state or sovereign) may refuse to submit to a national court's jurisdiction due to concerns about neutrality or submission to another state's jurisdiction per se . The alternative is a jurisdiction clause which may provide for exclusive or non-exclusive jurisdiction. A party with enough bargaining power will be best served by a clause that provides for exclusive jurisdiction in its home country's court or the courts (if they can be trusted) …