23 April 2018 - Post by:Crawford Jamieson
In AMT Futures v Boural the High Court has given guidance on the continuing nature of obligations under an exclusive jurisdiction clause.
AMT is an “execution only” derivatives broker involved in litigation in Germany with certain of its former clients. The contract between AMT and those clients contained a clause which provided that they ‘submit to the exclusive jurisdiction of the English Courts’. AMT argued, uncontroversially, that commencing proceedings in Germany breached this clause. The former clients contended that, because they began German proceedings more than six years ago, the limitation period for breach of the clause had elapsed and AMT’s claim was statute-barred. They applied for summary judgment on that basis.
The case hinged on the kind of obligations an exclusive jurisdiction clause creates – is it a promise not to begin proceedings outside England or a continuing obligation to maintain the position that no litigation exists outside England? If the former, the breach of the clause arose ‘once and for all’ when proceedings were commenced in Germany, and AMT’s claim would be statute-barred. If the latter, the breach continues for as long as proceedings exist outside England, and AMT’s claim could proceed.
It was conceded by AMT (generously in the eyes of the judge) that there was no decided case law on the matter. Salter J went back to ‘first principles’. He held that the proceedings in Germany were a prima facie breach of the exclusive jurisdiction clause. Intuitively, the foreign litigation was not evidence of an earlier breach, but a breach in itself. To put it technically, the German proceedings were an existing breach of a continuing obligation. AMT’s claim was therefore not statute-barred and the application for summary judgment was dismissed. Salter J’s judgment takes account of the commercial intent behind exclusive jurisdiction clauses and of judicial treatment of arbitration clauses, which have also been held to create continuing obligations.