In the recent case of AMT Futures (the “claimants”) v Boural & Orsand others (the “defendants”), the High Court has given clarification on the continuing nature of obligations under an exclusive jurisdiction clause and the limitation period applicable in respect of claims for breach of such obligations. This is considered to be the first judgement giving guidance on this issue.
The contract between the parties contained a clause which provided that the defendants ‘irrevocably submit to the exclusive jurisdiction of the English courts’, in relation to any disputes. The claimants recently sought relief in respect of the defendants breaching the exclusive jurisdiction clause by pursuing proceedings in Germany in 2008. The defendants argued that as they had begun German proceedings more than 6 years ago, the limitation period for breach of the contractual clause had passed (the statute of limitations for contract claims being 6 years) and that the claimant’s claim was statute-barred. They applied for a summary judgment on that basis.
The key to this case was to ascertain at which point a cause of action for the breach of an exclusive jurisdiction clause becomes time-barred. The High Court had to consider whether the cause of action started:
- when proceedings in another country are first commenced (i.e. in breach of the clause); or
- is there a continuing cause of action that lasts as long as the wrongful proceedings continue?
If the former, the breach of the clause began once proceedings were commenced in Germany, so the time began to run as soon as the breach of jurisdiction clause happened. If this was the case, the claimant’s claim would be statute-barred as the initial proceedings commenced just over 6 years ago. If the latter, the breach would be considered a continual breach, lasting as long as proceedings continued to exist outside of England. On this interpretation, the claimants would be able to proceed with their claim as simply put there was no ‘time period’ that would have begun at the time of the cause of action as the cause of action was still ongoing. This is because as long as the defendants were seen to be in continuous breach of the exclusive jurisdiction clause, it essentially became the claimants indefinite right to claim.
As there was no prior case law specifically dealing with this matter, the High Court looked to basic contract principles holding that the proceedings in Germany were a breach of the exclusive jurisdiction clause. It was held that exclusive jurisdiction clauses are continuing in nature and that it:
- stops a party from bringing proceedings in another country; and
- prevents a party from continuing any proceedings in any other forum other than an English court and therefore to bring any such proceedings to an end.
The continuation of proceedings in Germany were, prima facie, a continuing breach of the exclusive jurisdiction clause and therefore the limitation period had not begun. The court found in favour of the claimants meaning that they could claim for breach of contract in relation to the period beginning 6 years before the cause of action as they were not statute barred. The application for summary judgment was therefore dismissed.
This is good news for the use of exclusive jurisdiction clauses specifying the court of England and Wales in commercial contracts, as the courts will consider the commercial purpose of the clause, which is to protect a party from proceedings being brought in any forum other than the English courts. This also gives the party relying on the clause the right to the assistance of the English court by way of an anti-suit injunction to prevent the continuance and commencement of the proceedings in any other forum.
To access the full judgement of AMT Futures v Boural, please click here.