Jurisdiction
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Boilerplate Anatomy™
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Hey, I’m just doing my job. You give me that juris-my-diction crap, you can cram it up your ass.”
- —A subject matter expert to a middle manager in The Matrix
Generally speaking, the flavour of courts who have the power to resolve any litigation concerning your agreement. In a cross-border agreement, it is usual to state the governing law and whose courts have jurisdiction; in a purely domestic agreement they will not, it's being assumed that local law and local courts will always prevail.
There is always fun[1] to be had arguing over whether jurisdiction should be exclusive or non-exclusive, and what counts as a convenient forum.
Exclusive jurisdiction
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Negotiation Anatomy™
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Governing law chat. Mostly[2] pretty tedious, but the litigation department will get excited about it. Draw what conclusions about them, therefore, as you wish. The fun[3] questions will be such as these:
- Should the courts of (say) England and Wales have exclusive or non-exclusive jurisdiction to hear disputes. Even though the contract is governed by English law, might an Italian court — or a chamber of the Luxembourgouisie — have a stab at arbitrating it? Now I know what you are thinking. In what messed up, purblind existence would one be seriously entertaining a foreign court being asked to apply English law? Just go to an English court! It is a fair question, but you might have a Malaysian broker contracting with a Venezuelan asset manager under English law, in which case it might be a pain in the posterior for both to schlep up to the courts of chancery in Fleet Street to sort out the inevitable dispute.
Non-exclusive jurisdiction
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Negotiation Anatomy™
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When you are fairly keen for English courts to hear disputes about your contract — and (cough) any non-contractual obligations arising out of it, but you won’t die in a ditch about it. Compare with exclusive jurisdiction.
Rome II
Parties can agree to submit non-contractual obligations to the law of their choice. Previously, English courts haven’t been sure as to whether this is cricket. Rome II confirms that it is, where the agreement was made after the event giving rise to the damage; or where all parties are pursuing a commercial activity, if freely negotiated before the event giving rise to the damage occurred.