Introduction
On February 27, 2025, the Court of Justice to the European Union (“CJEU”) issued an important ruling on the validity of asymmetric (lop-sided) jurisdiction clauses in terms of the Brussels Regulation Recast. We first reported on the preliminary reference in October 2023.
The case involved an Italian entity, Società Italiana Lastre SpA (“SIL”), and a French company, Agora SARL (“Agora”). The lop-sided jurisdiction agreement in their contract provided:
‘the court of Brescia [(Italy)] will have jurisdiction over any dispute arising from or related to this contract. [SIL] reserves the right to bring proceedings against the purchaser before another competent court in Italy or elsewhere’.
Agora sued SIL in France, in breach of this clause, and SIL challenged the jurisdiction of the French Courts. The French Courts questioned the validity of the clause in light of its alleged imprecision, and referred the question to the CJEU.
Key findings
The first requirement for the validity of such clauses to be considered in terms of European Union (“EU”) law is that the first limb of the asymmetric jurisdiction clause designates the courts of an EU or European Free Trade Association (“EFTA”) Member State. A clause designating a Third State court, such as English courts, falls outside the scope of Article 25 of the Brussels Regulation Recast. In this case, this requirement was satisfied with the selection of the courts of Italy.
Article 25(1) of the Brussels Regulation Recast stipulates that a jurisdiction agreement will be valid unless it is ‘null and void as to its substantive validity under the law of [the] Member State’ chosen. According to the CJEU, this reference to substantive validity should be interpreted restrictively, limited to the general causes of nullity of contract, such as capacity and consent.
The CJEU held that asymmetry is not an issue of substantive validity, and reference to the law of the chosen Member State court would be inappropriate. Instead, the asymmetry must be assessed through autonomous criteria – most importantly, the requirement of precision, together with the objectives of foreseeability, transparency, and legal certainty.
In principle, an asymmetric jurisdiction clause is valid under EU law. Party autonomy is sacrosanct. However, quite unexpectedly, the CJEU implied that the second ‘optional’ limb of the asymmetric jurisdiction clause should not be so broad as to allow suit before the courts of non-EU or non-EFTA States. It should be limited to the courts of EU or EFTA Member States.
If the asymmetric jurisdiction agreement effectively designates the courts of one or more Third States, then it would be contrary to the Brussels Regulation Recast. The CJEU’s reason was that such clauses lack the legal certainty secured by the mutual reciprocity requirement of the Regulation. A Third State court would not apply the same rules of the Brussels Regulation Recast, but its own national private international law rules which may be entirely incongruous with those of the EU. Conflicts of jurisdiction would be detrimental to legal certainty.
Implications for commercial contracts
The CJEU left many questions unanswered, including whether the asymmetric jurisdiction clause in SIL vs Agora was valid. How the referring French court will apply the CJEU’s guidance to the case pending before it is yet to be seen.
In any event, it may be time to reconsider the litigious freedom typically afforded to lenders and other such contractual parties in favour of precision, predictability and legal certainty. To ensure the validity of an asymmetric jurisdiction clause before EU or EFTA State courts, parties may be well advised to restrict ‘any competent court’ to those within the EU or EFTA.
Disclaimer: Ganado Advocates is responsible for contributing to this law report but was not in any way involved as legal advisor for the parties in the judgement being covered in this law report. This article was first published in ‘The Malta Independent’ on 23/07/2025.
