Asymmetric jurisdiction clauses: lessons from ECJ Case C-537/23

The CJEU's judgment C-537/23 (Società Italiana Lastre SpA (SIL) v. Agora SARL) represents a significant development, providing much-needed clarity on the validity and enforceability of asymmetric jurisdiction clauses. This landmark decision addresses fundamental questions about contractual freedom and the balance of power in commercial relationships. It highlights the continuing importance of contractual certainty in cross-border commercial litigation within the EU for legal practitioners and businesses alike. 

What is an asymmetric jurisdiction clause?

Asymmetric jurisdiction clauses are contractual provisions that grant different jurisdictional rights to each party, i.e. one party may file a claim in at least one additional forum than the other party. Unlike symmetric jurisdiction clauses, which bind both parties to the same jurisdictional rules, asymmetric clauses create an imbalance by giving one party (typically the stronger party) a broader range of available forums to choose from.

The CJEU's analysis and key findings

The background of this decision was a dispute arising from a contract between Agora and SIL. This contract included a jurisdiction clause stipulating that the court of Brescia (Italy) would have jurisdiction over any dispute arising from or related to the contract. However, the clause reserved SIL's right to bring proceedings against the purchaser before any other competent court in Italy or elsewhere.

The owners of the project sued Agora and SIL for liability and compensation (due to alleged defects in the execution of the project) before the Regional Court in Rennes, France. Agora brought an action on a guarantee against SIL, who opposed the action on grounds of lack of international jurisdiction. When litigation started in France, the French courts questioned whether the clause was compatible with EU law and referred the matter to the CJEU. 

Three critical requirements for asymmetric jurisdiction clauses unveiled

The CJEU established three critical requirements for valid asymmetric jurisdiction clauses. 

First, the clause must state objective factors that are sufficiently precise to enable the court hearing the case to ascertain whether it has jurisdiction. These factors may be determined by the specific circumstances of the case and must identify, with sufficient precision, the courts to which the parties wish to submit their disputes. This requirement ensures compliance with the main goals of the Brussels Recast: foreseeability, transparency and legal certainty. 

Second, asymmetric jurisdiction clauses must comply with Articles 15, 19 and 23 of the Brussels Recast. Therefore, such clauses are valid only if they permit the weaker party in insurance, consumer or employment contracts to bring proceedings before courts other than those competent pursuant to the Regulation's provisions. An agreement is null and void if it excludes jurisdiction for the benefit of the insurer, co-contractor or employer.

Third, the CJEU clarified that Article 25 of the Brussels Recast does not require parties to designate courts of a single Member State. Such a limitation would contradict the principle of party autonomy, which must be respected. Parties may bring proceedings before courts in several Member States. This is consistent with Articles 7 and 8 of the Brussels Recast, which permit defendants domiciled in one Member State to be sued in another Member State based on factors such as the place of performance of contractual obligations, harmful events or the location of co-defendants. An asymmetric clause granting one party the option to sue before courts worldwide satisfies the precision requirement of Article 25(1) of the Brussels Recast only to the extent that it designates courts of EU Member States or Lugano II Convention Contracting States. Such clauses would be inconsistent with the objectives of foreseeability, transparency and legal certainty.

The requirements of precision, protection of weaker parties and respect for party autonomy are autonomous concepts of EU law, distinct from the "material validity" assessment under Article 25(1), which concerns only general contractual invalidity grounds such as lack of consent, capacity or vitiated consent (mistake, fraud, duress). Consequently, the validity of an asymmetric clause cannot be challenged under national law merely on grounds of its asymmetry or imprecision, as these are self-contained EU law requirements.

Practical guidance for drafting valid asymmetric jurisdiction clauses

Based on the CJEU's analysis in Case C-537/23, asymmetric jurisdiction clauses in commercial contracts are valid, provided that they meet the following requirements:

1. The clause designates courts of one or several EU Member States or parties to the Lugano II Convention (e.g. Switzerland, Iceland and Norway).
2. The clause contains objective factors that are sufficiently precise to enable the court hearing the case to ascertain whether it has jurisdiction or not.
3. The clause complies with Articles 15, 19 and 23 of the Brussels Recast, ensuring that weaker parties in insurance, consumer or employment contracts retain their right to bring proceedings before courts other than those designated in the clause, and does not derogate from exclusive jurisdiction under Article 24 of the Brussels Recast.

Shaping the future of cross-border commercial litigation

The CJEU's decision in Case C537/23 provides much-needed clarity for asymmetric jurisdiction clauses. The CJEU expressly rejected the contention that Article 25 of the Brussels Recast requires jurisdiction clauses to be mutual or symmetric. The principle of party autonomy, which underpins Article 25, permits the parties to agree that one party shall have a wider choice of forum than the other, provided the remaining requirements are satisfied. Perhaps most significantly, the CJEU's approach demonstrates a sophisticated balance between contractual freedom and regulatory protection. The court's three-part test offers practical guidance for commercial parties and their legal advisors, reducing litigation risk and enhancing contractual certainty across the EU.

This landmark decision reinforces the importance of precision and legal certainty as fundamental values in EU jurisdiction law, facilitating efficient cross-border dispute resolution within the European legal framework. 

authors: Sara Khalil, Verena Schnittler