On application by U.S. defendant for change of forum, English Commercial Court rules that neither risk of parallel U.S. proceedings nor takeover of English plaintiff by U.S. corporation required English court to decline to enforce freely bargained for clause selecting English forum for contract litigation
Biosafety, U.S.A., Inc. (Applicant) petitioned the Commercial Court in London to set aside or to stay proceedings filed there by X, the Respondent. Respondent had hailed Applicant into an English court on a claim for breach of contract. Applicant is a company incorporated in the U.S. while X is a United Kingdom company. X was a manufacturer of chemical products in the U. K. while Applicant was under contract to market the items in the U.S.
Their distribution contract included a non exclusive English jurisdiction clause. Since entry into the contract, Antec International Ltd., a U.S. company, had become the owner of X's assets. Applicant contended that the U.S. instead of the U. K. was the proper forum in which X and Applicant should litigate their dispute.
The Commercial Court dismisses the application. It could not find a strong or overwhelming reason to justify an English Court to depart from the choice of forum clause in the contract. The fact that Applicant and X had freely negotiated the distribution agreement and the forum clause, generates a strong prima facie case for English jurisdiction.
In the Court's view, the relevant factors would not include factors of convenience or inconvenience which the parties could have foreseen at the time they were negotiating the distribution agreement. Thus, the parties made their deal presumably realizing that, in case of a litigation in London, Applicant would have to transport some witnesses and/or documents from the U.S. to the U. K.
Nor is there merit in Applicant's contention that the fact that a U.S. company had taken over X affected the jurisdictional equation. The change in ownership and the slight operational changes that came about do not amount to an unforeseeable consequence that would be likely to produce injustice.
Finally, Applicant had suggested at some point that it might file a claim in the U.S. courts against X's new American owner. While this could conceivably risk the expense caused by parallel U.S. proceedings as well as increase the danger of inconsistent results, the Commercial Court notes that Applicant had not taken this step as of the time the forum issue came before the Court. Moreover, the mere fact that one of the parties had filed, or was about to file, proceedings in another jurisdiction outside the scope of the forum selection clause does not supply a compelling reason to relieve that party of his bargain, despite the undesirability of parallel proceedings and the danger of conflicting outcomes.
Citation: Antec International Ltd. v. Biosafety U.S. A., Inc. (Eng. High Court, Queen’s Bench Division, Commercial Court, 2006), as summarized at 2006 I. L. Pr. 497 (Sweet & Maxwell).
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