November 7, 2022

In the recent decision of Ayers Rock SkyShip Pty Ltd v Lindstrand Technologies Limited [2022] FCA 1208, the Federal Court considered the enforceability of an exclusive jurisdiction clause.

Lindstrand Technologies Limited (Lindstrand) and Ayers Rock SkyShip Pty Ltd (Ayers), entered into a Purchase Agreement to sell and supply an airship to Ayers.  The airship became inoperable and Ayers commenced proceedings against Lindstrand concurrently in the UK and Australia.

In the UK proceeding, Ayers’ claim was based on a breach of contract, alleging the airship supplied was defective.  In the Australian proceeding, Ayers alleged that Lindstrand made several pre-contractual representations about the airship which amounted to misleading or deceptive conduct under the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law or ACL).

Relevantly, clause 22 of the Purchase Agreement conferred exclusive jurisdiction upon UK courts:

Any dispute which may arise between the parties concerning this Agreement shall be determined by the English Courts and the parties hereby submit to the exclusive jurisdiction of the English Courts for such purpose.

Lindstrand applied to the Federal Court for a permanent stay of the Australian proceeding on the basis of the exclusive jurisdiction clause.  Lindstrand asserted that the Court should grant the stay and enforce the exclusive jurisdiction clause because:

  •    Australia was a ‘clearly inappropriate forum’ to hear the dispute given the purported commonalities between the two proceedings which results in an identical issue being litigated twice; and
  •    the ACL claims advanced by Ayers were not dissimilar to causes of action available in the UK, and as such, do not constitute ‘strong reasons’ to disregard the exclusive jurisdiction clause.

In response, Ayers asserted that the ACL claims were materially different, more likely to succeed, and less restrictive in nature than the claims available to it in the UK.  These factors meant that there was a juridical advantage to pursuing the ACL claims in Australia, thereby rendering Australia an appropriate forum to hear the dispute.

Ayers asserted that a UK court would not entertain an ACL proceeding of the nature pursued in the Australian proceeding.  This, Ayers reasoned, supplied the requisite ‘strong cause’ for not enforcing the exclusive jurisdiction clause.

Justice Bromwich found in favour of Ayers and elected not to enforce the exclusive jurisdiction clause.  In reaching his decision, his Honour found that:

  •    commencing proceedings in Australia meant Ayers could pursue ACL claims which were not available to it in the UK jurisdiction; and
  •    it was important from a public policy perspective to ensure foreign goods suppliers are not held to a lower standard of conduct and behaviour than that expected of domestic suppliers,

were both strong grounds to exercise the Court’s discretion to not enforce the exclusive jurisdiction clause and ultimately, reject Lindstrand’s stay application.

The full decision can be found here.

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