Problems of the Applicable Law of the Contract in the English Common Law Jurisdiction Rules: The Good Arguable Case

Abstract

The applicable law of a contract is important in two distinct ways in matters of the jurisdiction of the English courts in cases involving foreign defendants that are not covered by the Brussels I Regulation or the Lugano Convention. First it is a ground or 'gateway' for the existence of jurisdiction where a claimant seeks the permission of the court for service of the claim form on a defendant out of the territorial jurisdiction of the English court. Where there is a dispute about the applicable law, the claimant must use choice-of-law rules to establish that the contract is governed by English law to the standard of the 'good arguable case'. This is not a straightforward test. Secondly, the applicable law is a factor in the exercise of discretionary jurisdiction. The English court deploys the doctrine of forum conveniens in the exercise of the discretion both in cases of service out and in cases where a defendant who has been served with the claim form within the jurisdiction asks for a stay of the English proceedings on the basis that there is another clearly more appropriate forum. The decision on the forum conveniens is also taken at the interlocutory stage. Here too there may be a dispute about what law is the applicable law. That dispute is resolved using choice-of-law rules in a manner similar to the gateway argument. However, the parties are likely to adopt a more sophisticated strategy in this second case. The parties may further dispute the content or the effect of the applicable law in order to support or challenge the exercise of jurisdiction by the English court. Those disputes are also decided by application of the good arguable case test.