A one-way jurisdiction clause (also known as “hybrid”, “asymmetrical” or “unilateral non-exclusive” jurisdiction clauses), requires that one of the parties to a contract must always submit a dispute arising from the contract to a particular country’s courts, whilst allowing the other party the flexibility to commence proceedings in the courts of any country it may choose.
One-way jurisdiction clauses are becoming more prevalent in Life Science transactions where, by way of example, licensors want the flexibility to deal with patent related disputes in the courts of the country where the patent is applied for or granted.
Recent court decisions in a number of jurisdictions have questioned the validity of one-way jurisdiction clauses.
To maximise the likelihood of a one-way jurisdiction clause being enforceable, consider taking the following steps:
- choose as governing law the laws of a jurisdiction that recognises the validity of one-way jurisdiction clauses;
- include in the one-way jurisdiction clause an explanation of why the unilateral right to bring proceedings in a second jurisdiction is required – many of the recent decisions on the validity of one-way jurisdiction clauses focus on the lack of fairness to one party; if there is an objective reason for making the jurisdiction clause it may give better arguments to defeat this “unfairness” defence;
- if you know at the outset that disputes are likely to arise in certain jurisdictions, take local law advice on the enforceability of one-way jurisdiction clauses in these jurisdictions before executing the contract;
- consider presenting a one-way jurisdiction clause as a non-exclusive jurisdiction clause.
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