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Review of the non-exclusive jurisdiction provision

Yau Khai LingNicole Ong Hwee Koon

In Orchard Capital I Ltd v Ravindra Kumar Jhunjhunwala [2012] SGCA 16, the Singapore Court of Appeal propounded the important principles concerning the interpretation and the legal effects of non-exclusive jurisdiction agreements.

The respondent in this case sought to stay the proceeding based on the ground of forum non conveniens, by relying mainly on an agreement between the appellant and himself which contains the following clause:

"23 Governing Law

This Agreement is governed by and construed in accordance with the laws of Hong Kong, SAR. The Parties submit to the non-exclusive jurisdiction of the courts of Hong Kong, SAR. The parties hereby knowingly, voluntarily and intentionally waive to the fullest extent permitted by law any rights they may have to trial by jury in respect of any litigation based hereon, or arising out of, under or in connection with this Agreement."

The court ruled that in so far as non-exclusive jurisdiction clauses are concerned, there are two central strands of analysis.

The first central strand is contractual in nature, which turns on the construction of the intention of the parties, and which is in turn to be gathered from the language used as well as the surrounding factual matrix. If, based on a proper construction thereof, a non-exclusive jurisdiction clause could be given the effect of an exclusive jurisdiction clause, a strong cause would be required to be demonstrated by the party seeking a stay of the proceeding.

The second central strand is general in nature, which basically centres around the court's prerogative in determining the appropriate forum, which in turn largely depends on the precise circumstances before the court. A non-exclusive jurisdiction clause is deemed only as one of the factors to be considered.

On the contractual approach, the court opined that having regard to the context in which the agreement was entered into, Clause 23 ought to be construed as being (i) drafted in a manner consistent with an approach that benefited the appellant; and (ii) intended to offer more flexibility in enforcing the agreement. There is no evidence whatsoever which demonstrates that Clause 23 was intended to be attributed the effect of an exclusive jurisdiction clause.

On the general approach, the court held that the respondent bears the onus of establishing there is another forum which is clearly or distinctly more appropriate than Singapore. The court's opinion was that the agreement itself was intended to ensure, among other things, that the respondent discharges his contractual obligations and there was simply no evidence that Clause 23 was intended by the parties to be strong indicator that Hong Kong is a clearly or distinctly more appropriate forum.

On this basis the court rejected the stay and allowed the appeal.

This decision sheds light on the legal effects of non-exclusive jurisdiction clauses. With this celebrated decision in mind, practitioners need to be alerted that a non-exclusive jurisdiction clause would not, by the fact itseslf, be deemed as a strong indicator that the designated forum is the more appropriate forum where an international dispute ought to be adjudicated.

Yau Khai Ling and Nicole Ong

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