Clifford Chance

What future for unilateral dispute resolution clauses?

16 October 2012

It is common practice to insert into contracts unilateral choice-of-court clauses, granting to one party only the option to refer the dispute to one of several jurisdictions. Until now, the validity of this type of clauses did not seem problematic. However, their effectiveness has just been undermined by a decision from the Cour de cassation (n°11-26.022) dated 26 September 2012.

In the case submitted to the Cour de cassation, the forum selection clause contained in the contract was drafted as follows:

"Potential disputes between the client and the bank shall be subject to the exclusive jurisdiction of the Courts of Luxembourg. Failing such election of jurisdiction, the Bank reserves the right to act before the courts of the client's domicile or any other court of competent jurisdiction".

The clause notwithstanding, one of the parties, a natural person domiciled in Spain, but not a consumer, filed a claim before the French courts against both the Luxembourg bank and the French financial institution through which it opened its bank account in Luxembourg.

Download PDF