Asymmetric jurisdiction clauses, which impose different jurisdictional obligations on contracting parties, have long been a subject of legal debate. While these clauses are commonly used in financial agreements, they also appear in other commercial contracts where one party seeks greater flexibility in determining the forum for legal disputes. The recent decision of the Court of Justice of the European Union (CJEU) in Società Italiana Lastre SpA v Agora SARL (C-537/23) provides significant clarification on the validity of such clauses under EU law.

Background to the Case

The dispute in Lastre arose from a contract between an Italian supplier and a French buyer, which included an asymmetric jurisdiction clause. This clause required the French party to bring any disputes exclusively before the courts of Brescia, Italy, while allowing the Italian party to initiate proceedings in other competent courts, whether in Italy or abroad. Despite this provision, the French party commenced proceedings in France, prompting the French Cour de Cassation to seek guidance from the CJEU on the validity of asymmetric jurisdiction clauses under the Brussels Regulation (Recast) (Regulation (EU) 1215/2012).

The CJEU’s Key Findings

The CJEU ruled that the validity of asymmetric jurisdiction clauses is a matter of EU law, rather than national law, and must be assessed under the Brussels Regulation (Recast). The judgment established three main criteria for an asymmetric jurisdiction clause to be upheld:

1. Jurisdiction must me limited to EU or Lugano Convention States – The court held that an asymmetric clause can only grant jurisdiction to courts in EU member states or states that are parties to the Lugano Convention (Norway, Iceland, and Switzerland). Allowing jurisdiction in non-EU, non-Lugano states would undermine the principles of foreseeability, transparency, and legal certainty required by the Regulation.
2. Sufficiently Clear and Objective Criteria – The clause must identify the courts with jurisdiction based on objective factors, ensuring that any court seised of a dispute can determine whether it has jurisdiction without ambiguity. A broadly worded provision, such as granting one party the right to sue in "any other competent court," may not always satisfy this requirement, depending on its interpretation.
3. Compatibility with Exclusive Jurisdiction Rules – The clause must not contravene the mandatory provisions of the Brussels Regulation (Recast), including rules on exclusive jurisdiction in certain areas such as employment, consumer, and insurance contracts.

Implications of the Decision

The ruling clarifies the conditions under which asymmetric jurisdiction clauses can be enforced within the EU. For businesses and legal practitioners, the judgment underscores the importance of drafting such clauses with precision, ensuring that they comply with the requirements set by the CJEU.

One major consequence of the decision is the potential limitation on asymmetric jurisdiction clauses that extend beyond the EU and Lugano Convention states. This is particularly relevant in cross-border agreements involving parties from third countries, such as the United Kingdom post-Brexit. If a contract grants jurisdiction to both an EU member state and a third country court, the enforceability of the clause in the EU may be in doubt.

Impact Beyond Finance Contracts

While asymmetric jurisdiction clauses are frequently associated with financial agreements, they also appear in various other commercial contracts, particularly those involving parties with unequal bargaining power. Suppliers, licensors, and service providers may seek to include such clauses to retain flexibility in dispute resolution. However, the Lastre decision suggests that their enforceability will depend on meeting the strict criteria set by the CJEU.

Conclusion

The Lastre ruling marks an important development in EU jurisdictional law, confirming that asymmetric jurisdiction clauses are valid under certain conditions. However, it also imposes stricter requirements to ensure transparency and legal certainty.

At Economou & Co LLC, we provide strategic advice on the compliance of contractual agreements with EU law, with a particular focus on cross-border transactions involving EU parties. Our expertise includes assessing jurisdictional risks, drafting enforceable dispute resolution clauses, and ensuring that agreements align with applicable legal frameworks. We also assist clients in navigating jurisdictional challenges in cross-border disputes, helping them mitigate risks and safeguard their legal interests.