Law & contractsen
Jurisdiction
The court or body designated by the parties or by law to hear disputes arising from an international contract.
Jurisdiction refers to the court or body that has the power to decide disputes arising from an international contract. The choice of jurisdiction is a major strategic decision.
Parties have two main options:
- State courts: courts of a specific country (jurisdiction clause)
- Arbitration: institutional arbitral tribunal (ICC, LCIA, etc.) or ad hoc
In the European Union, judicial jurisdiction is governed by the Brussels I Recast Regulation (1215/2012) which provides for:
- Jurisdiction of the courts of the defendant's domicile (general rule)
- Jurisdiction of the place of performance of the obligation in question (contractual matters)
- Prorogation of jurisdiction: validity of jurisdiction clauses between businesses
Drafting advice for the clause:
- Precisely designate the competent court (city, country)
- Specify whether jurisdiction is exclusive or not
- Coordinate with the choice of governing law
- Consider arbitration for non-EU transactions (better international enforcement via the New York Convention)