Asymmetric jurisdiction clauses: valid under EU law but uncertainty remains

On 27 February 2025, the Court of Justice of the European Union (CJEU) handed down a significant decision on asymmetric jurisdiction clauses in the case of Lastre (C-537/23). While the judgment confirms the validity of the clauses for the purposes of Article 25 of the Recast Brussels Regulation in certain circumstances, it leaves some uncertainty as to how EU Member States will treat asymmetric jurisdiction clauses that allow a party to bring a claim in the English courts.

What are asymmetric jurisdiction clauses?

Asymmetric jurisdiction clauses grant one party more flexibility than their counterparty in selecting a forum for disputes. They are common in international lending agreements, as lenders are often the likely claimant and so seek jurisdictional advantages. Typically, asymmetric EU jurisdiction clauses:

• allow the lender the right to sue in multiple jurisdictions; and
• require borrowers to refer disputes to a specified EU Member State.

This enables lenders to bring a claim in the jurisdiction where the borrower has the most assets against which to enforce, while ensuring certainty over the courts in which the lender would need to defend a claim. English courts, along with certain EU jurisdictions, have historically recognised asymmetric jurisdiction clauses. However, French courts have been more resistant, due to a perceived lack of fairness arising from the fact that not all parties can foresee where they might be sued.

The CJEU’s decision in Lastre

Lastre, a French case, concerned a dispute over the supply of panelling. The underlying contract specified the court of Brescia (Italy) as the forum for any contractual dispute, but also set out that one of the parties “reserves the right to bring proceedings against [the counterparty] before another competent court in Italy or elsewhere”. The CJEU ruled that such a clause would be valid only if “another competent court” is interpreted as referring to the courts of EU Member States or Lugano Convention states (ie Switzerland, Iceland and Norway).

To summarise the CJEU’s position:

• Asymmetric jurisdiction clauses may be valid, provided the additional court choices are limited to EU or Lugano Convention states.
• These clauses must have objective criteria for determining jurisdiction.

Asymmetric jurisdiction clauses permitting proceedings in non-EU or Lugano Convention countries will not be upheld. The CJEU held that allowing jurisdiction to be determined by the private international law rules of third countries undermines the foreseeability, transparency and legal certainty required by the Recast Brussels Regulation.

Implications

The Lastre decision highlights the importance of clarity in contractual drafting. If parties wish to restrict the choice of courts to only EU or Lugano Convention countries, they should state this explicitly in the contract. A vague reference to “any competent court” risks the clause being found invalid for failing to designate the court with sufficient certainty. Alternatively, an exclusive jurisdiction clause provides absolute certainty.

Asymmetric jurisdiction clauses that designate the English courts remain valid but face risks in the EU. English courts will continue to enforce these clauses. However, where a broadly-worded asymmetric English jurisdiction clause comes before a Member State court, there is an increased risk that it may be found invalid, leading the court to decline jurisdiction.

Where broad flexibility is not required, parties should consider narrowing the scope of their asymmetric English jurisdiction clauses or opt for the certainty of an exclusive English jurisdiction clause.

While the CJEU has confirmed that asymmetric jurisdiction clauses remain valid in principle, its ruling in Lastre has the potential to limit their validity in cross-border disputes. Lenders and commercial parties relying on English asymmetric jurisdiction clauses should reassess their drafting approach to mitigate the risk of jurisdictional challenges in EU courts.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, March 2025