Professional Documents
Culture Documents
INTRODUCTION
In order to effectively discuss the subject matter of contractual ouster
of Jurisdiction which is the exclusion of jurisdiction of courts by
agreement of contracting parties, it is necessary to first appreciate the
meaning of the word ‘jurisdiction’
In 1856 in Scott V Avery it was held that quite apart from statute by
the operation of the old common law doctrine an arbitration clause
could be drafted so as to displace the jurisdiction of the courts, if the
parties framed their agreement to arbitrate as a condition precedent
to court proceedings. In such a circumstance it was held that the
courts would not entertain any action until after the arbitrator had
made his award.
The first Plaintiff appealed to the Court of Appeal but withdrew the
appeal on an undertaking from the respondents to waive the limitation
period provided in the bill of lading.
USA COURTS
In the United States the effect of a choice of forum clause dealing
with future controversies is uncertain in the great majority of cases,
the state courts have entertained suits brought in violation of such a
clause. A number of recent federal court decisions, on the other hand,
have enforced choice of forum clauses by refusing to hear the suit in
situations where the clause was deemed to be fair and reasonable.
The reasons stated by the courts for denying effect to choice of forum
clauses are unconvincing. By and large, the courts have contented
themselves with saying either 1. that the parties cannot by their
agreement oust a court of jurisdiction or 2. that to allow the parties to
change the rules relating to the place where suit may be brought
would ‘disturb the symmetry of the law” and lead to convenience or 3.
simply that choice of forum provisions are against public policy.
The main question however, is whether the state courts are likely to
follow the lead of certain federal court decisions which evince a more
sympathetic attitude toward choice of forum clauses. Unfortunately,
the federal decisions are in conflict and their meaning is not entirely
clear. In Wim. H. Muller & Co V Swedish American Lines Ltd a suit
was brought in a federal court in New York to recover the value of a
cargo of cocoa beans that was lost in transit between Sweden and
Philadelphia on a vessel owned by the defendant, a Swedish
corporation. Despite the fact that the Plaintiff consignee was a New
York Corporation suit was dismissed in the District court by reason of
a clause in the bill of lading which stipulated that any claims against
the defendant should be decided according to Swedish law and in
Swedish Courts. The decision was affirmed by the Court of appeals.
It held first that the choice of forum clause was not contrary to the
United States carriage of Goods by Sea Act, since its application
would not result in a “lessening” of the “liability” imposed upon the
defendant by the Act. The court then went on to say that, except
when prohibited by statue, a choice of forum clause should be given
effect unless unreasonable. The clause in question was held not to
be unreasonable for the reason, interalia, that “most of the evidence
as to unsea-worthiness will be more readily available in a Swedish
court” since all members of the crew resided in Sweden and the
vessel had been constructed in that country. Also “for aught that
appears” the consent of the parties to the inclusion of the choice of
forum clause in the bill of lading had been “freely given. This decision
is very significant and appropriate. Dismissal of the suit had to based
on the choice of forum clause since in view of Plaintiff’s incorporaton
in New York and of other facts as well, reliance upon the doctrine of
forum non convenience would not have been justified. Also the
opinion can be read to support the view that a choice of forum clause
will be enforced unless the party who wishes to escape from its
provision can convince the court that its application would be
unreasonable in the circumstances of the case. Further there is some
language which would support the view that the decision holds only,
that a choice of forum clause will be enforced if the selected state is
the most convenient place for the trial of an action. The Muller
approach was generally welcomed by academic writers and was
adopted in the Second Restatement of the Law; Conflict of Laws
Section 80 provides
“The parties agreement as to the place of action cannot
oust a state of judicial jurisdiction, but such an agreement
will be given effect unless it is unfair or unreasonable”
Other District Court decisions, on the other hand, seem to hold, that a
choice of forum clause will only be enforceable if a selected state is a
more convenient place for the trial of the action than the one in which
the plaintiff has brought the suit, one other by the Court of Appeal in
Cerro De Pasco Copper Corp. V. Knut Knutsan contains helpful
language but involved a transaction that had little or no connection
with the United States; hence dismissal of the action had been based
solely on forum non convenience grounds.
Not all federal followed the Muller lead In Carbon Black Export V.
The S.S. Monrosa by the Court of Appeals of the fifth circuit, the
plaintiff, an American exporter, sued to recover for damages for non-
delivery of a cargo of carbon black, which had been placed on board
the S.S. MONROSA in the United States for shipment to Italy suit was
instituted both in rem and in personam against the vessel and the
vessel’s owner, an Italian corporation. The defendant sought to have
the action dismissed because of provision in the contract that any
action for loss or damage to the goods should be brought only in
Genoa. A dismissal was granted by the trial court, but the Court of
Appeals reversed and held that the in rem action against the vessel
did not come within the language of the choice of forum clause. With
respect to the action against the vessel’s owner, the Court stated that
“the universally accepted rule is that agreements in advance of
controversy to oust the jurisdiction of the courts are contrary to public
policy and will not be enforced” The court went on to say, however,
that it was not necessary on the facts of the case to “espouse or
reject” the position taken by the Courts of Appeals of the Second
Circuit in the Muller case. With respect to the dismissal of the action
in personam the Court of Appeal said that the case did not afford” an
appropriate instance to pass upon the extent to which effect can be
given to… stipulations in ocean bills of lading not to resort to the
courts of this country.
The status in the United States choice of forum clauses dealing with
future controversies is at best uncertain. As shown, hitherto, most
state courts decisions appear to hold choice of forum clauses
unenforceable. As the Federal Courts are concerned, there appears
to be conflict between the views of the Court of Appeals of the 2 nd and
5th Circuit. At best the Supreme Court intervention in the Zapata case
confines the principle of prorogation to admiralty cases, going by the
verdict of the court itself. It is however, hoped that State and Federal
courts alike will adopt a common rule that choice of forum clauses are
prima facie enforceable and should be denied effect only upon a
showing that their application in the given case would lead to
manifest injustice.
ARBITRATION AGREEMENTS
While the effect choice of forum or prorogation agreements may be
somewhat uncertain and in a state of flux in the United States, the
position of arbitration agreements is rather clearer. Whatever their
effect under American Common Law legislation exists in many
American jurisdictions notably the Federal Arbitration Act and the
Uniform Arbitration Act which has been enacted in a number of states
some other states have their own non-uniform legislation.
NIGERIA
The Nigerian judicial approach to choice of forum clauses in
contractual agreements has to all intent and purposes followed the
English Common law doctrine after an initial US type hostile altitude
the guiding principle had earlier been clearly stated by the Supreme
Court in Adesanya V. Palm Line where it was held that the court has
a discretion to uphold or reject a foreign jurisdiction clause and that
the court will be rejected where the justice of the case so demands on
matters of arbitration agreement, the Nigerian courts have always
been guided by the Scott V Avery clause In Agbizounon V The
Northern Assurance Co Ltd Paul J held that an agreement to refer
dispute to arbitration before recourse to court did not amount to
ouster of the jurisdiction of the court and should be upheld.