On 27 February 2025, the Court of Justice of the European Union (CJEU) issued a landmark decision (C-537/23) addressing the validity of asymmetric jurisdiction clauses under Article 25 of the Brussels Recast Regulation.1 While the CJUE ruled that clauses requiring one party to litigate in one court while the other party has a choice for different forums can be valid, it put some limitations which will need to be carefully assessed in practice. Probably the most important one for market-practice is that such clause must only designate courts of Member States of the EU or of States parties to the Lugano Convention.2
Background
Asymmetric jurisdiction clauses are widely used in commercial contracts, especially in financing documents. Typically, borrowers are required to litigate in one specific jurisdiction, while lenders keep the right to bring proceedings in any competent court, enabling them to launch proceedings in courts from which they could more easily enforce the decision on the borrower's assets, as assessed at the time of the dispute.
Despite their long-standing use in financial transactions, their enforceability within the EU has remained uncertain, especially following evolving case law from the French Cour de cassation since 2012.
This CJEU judgment arose from a preliminary ruling question raised by the same French Cour de cassation, on a clause in a supply contract giving competence to an Italian court, while the Italian supplier could sue "before another competent court in Italy or abroad".3
Application of EU law for the validity of asymmetric clauses
First, the CJEU decided that the validity of asymmetric jurisdiction clause was to be assessed under the autonomous set forth under the Brussels Recast Regulation, especially its Article 25, and not under the national law of the Member State designated in the clause.
This approach will provide uniformity (and hopefully (at some point) predictability) within the EU legal framework, avoiding reliance on the differing national laws of Member States.
Validity under EU law, but with strict conditions
The CJEU upheld the principle of asymmetric jurisdiction clauses, based on parties' autonomy.
However, such clause can only give competence to courts of an EU Member State or a State party to the Lugano Convention. Indeed, the CJEU decided that a clause granting (asymmetric) competence to courts not bound by the Brussels Recast Regulation or the Lugano Convention "would not be consistent with the objectives of foreseeability, transparency and legal certainty" as competence of such court would be "the result of the application of the rules of private international law of third countries",4 creating an "increased risk of conflicts of jurisdiction arising which would be detrimental to legal certainty".5
The CJEU adds that the clause must identify "objective factors which are sufficiently precise to enable the court seised to ascertain whether it has jurisdiction".6 This condition is explained by the CJEU by reference to its previous case law that a jurisdiction clause does not need to expressly designate a court, but can only state factors based on which the court has jurisdiction, as long as such factors are "sufficiently precise to enable the court seised to ascertain whether it has jurisdiction, may, where appropriate, be determined by the particular circumstances of the case being examined by the court".7
Finally, the asymmetric jurisdiction clause must not be contrary with the provisions on jurisdiction relating to insurance,8 consumer contracts9 or individual contracts of employment,10 as well as the exclusive jurisdiction provisions (mainly relating to immovable property, company law and IP).11
Impact
This judgment does not close the discussion on the validity of asymmetric jurisdiction clause in the EU. While it confirms that such clause can be valid, this ruling will have significant impact:
- The limitation to courts of EU Member States or States parties to the Lugano Convention creates a legal risk. In finance, contracts often contain asymmetric jurisdiction clauses designating UK Courts. While this judgment of the CJEU is not directly applicable to such clauses, courts in the EU could interpret such clauses in light of this ruling; and.
- The requirement of objective criteria could impair clauses often seen in practice designating for one party 'any competent court'. In that regard, the upcoming decision of the French Cour de cassation in the case at hand will give some guidelines on how (domestic) courts interpret the conditions set forth by the CJEU.
1 Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast).
2 Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, signed on 30 October 2007.
3 Judgment of 27 February 2025, Società Italiana Lastre SpA (SIL), C-537/23, EU:C:2025:120, para. 17.
4 Id., para. 60.
5 Id., para. 61.
6 Id., para. 67.
7 Id., para. 42, with reference to Judgment of 9 November 2000, Coreck, C‑387/98, EU:C:2000:606, para. 15 and to Judgment of 7 July 2016, Hőszig, C‑222/15, EU:C:2016:525, para. 43.
8 Art. 15 of the Brussels Recast Regulation.
9 Art. 19 of the Brussels Recast Regulation.
10 Art. 23 of the Brussels Recast Regulation.
11 Art. 24 of the Brussels Recast Regulation.
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