- Types of jurisdiction clauses in contracts and when to use anti-suit injunctions
Most modern contracts contain a jurisdiction clause, empowering the courts of a particular country to decide disputes. What happens when parties include a jurisdiction clause? Let’s assume that the parties intend to expressly specify under the contract the courts which will have jurisdiction over disputes arising from the contract. They could specify, for example, that Indian courts, US courts or the courts of a third ‘neutral’ country (e.g. United Kingdom) would resolve any disputes related to the contract. The contract may specify whether such courts have exclusive jurisdiction or whether the jurisdiction is non-exclusive.
For example, consider the following clause:
“All disputes arising in relation to this contract shall be subject to the non-exclusive jurisdiction of courts in England.”
Although the above clause confers jurisdiction on English courts, it does not contain wording that expresses the intention of parties to take away the jurisdiction of courts in other countries, e.g. in India or in the US. Such a clause can be dangerous. Say, USCo wants to approach an English Court in relation to a dispute arising out of any action taken by IndCo in India pursuant to the contract. In this situation, IndCo may attempt to approach an Indian court for an anti-suit injunction. It may not want the matter to be decided by English courts for various reasons –it may add to its costs, it may have a higher likelihood of an adverse judgment, or it may not want a quicker resolution of the dispute by a foreign court (if IndCo knows that it is the defaulting party), etc. If the anti-suit injunction is granted, USCo will only be able to resolve the dispute in Indian Courts.
Consider the following clause:
“All disputes arising in relation to this contract shall be subject to the exclusive jurisdiction of the Courts in Australia.”
The above clause clearly expresses that parties can only approach courts in Australia in the event of a dispute. In light of the example of USCo and IndCo in the previous section, let us consider two situations:
Question 1: Can IndCo still approach an Indian court, asking for an anti-suit injunction against the proceedings before the Australian courts?
Although the possibility of issuing an anti-suit injunction is not completely ruled out, Indian courts will be extremely unlikely to issue one, as that would go against the express choice of the parties (who have chosen to resolve disputes in Australia) (see below under the heading Principles under Indian law for grant of anti-suit injunctions).
Question 2: What action can USCo take if IndCo initiates an action in the courts of Singapore?
US Co could file an application for an anti-suit injunction in an Indian court to prevent IndCo from initiating legal proceedings anywhere except in Australia.
Note: In both situations, it is essential that the court which is approached for issuing an anti-suit injunction has ‘personal jurisdiction’ over the defendant – i.e. if it is an Indian court, the defendant must be an Indian, or it must reside in India (or operate a business there) or it should have done something in India owing to which the Indian court can exercise jurisdiction over the foreigner. A neutral court in a ‘foreign country’, even if it is chosen by parties, e.g. an Australian court cannot issue an anti-suit injunction.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.