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English Jurisdiction Clauses Bring the World’s Disputes to London

English jurisdiction clauses are the norm in commercial contracts around the globe and result in a host of international disputes finding their way to London. However, as a High Court case concerning a $66.5 million promissory note illustrated, foreign parties are sometimes reluctant to participate in English court proceedings.

A Chinese insurance company had the benefit of the note, which had been issued by a Nigerian company in connection with the funding of an oil exploration project. The note was governed by English law and was subject to a non-exclusive English jurisdiction clause. After the note matured, the Chinese company took action in London to enforce payment in full, but the Nigerian company disputed jurisdiction.

In dismissing the Nigerian company’s application for a stay of the proceedings, the Court rejected arguments that the note was subject to an arbitration clause that had been agreed between the parties in the context of their wider commercial dealings. The Chinese company having sued on the note in London, the Nigerian company was contractually bound to submit to the jurisdiction of the English courts.

The Nigerian company pointed out that the oilfield under exploration had yet to yield any hydrocarbons. However, its argument that a binding compromise had been concluded, whereby it was permitted to pay sums due under the note in instalments – and that that gave rise to a right to arbitrate – also fell on fallow ground.

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