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13 Dec 2019

Commercial Court considers the scope and effect of an asymmetric jurisdiction clause


In Etihad Airways v Flöther [2019] EWHC 3107 (Comm) the Court found that disputes arising out of a comfort letter were subject to a jurisdiction clause in an associated facility agreement.  It also found that an asymmetric jurisdiction clause was an exclusive jurisdiction agreement for the purposes of Article 31(2) of the Brussels Recast Regulation.  As a consequence, proceedings could be brought in England in reliance on the clause, in spite of existing proceedings in Germany.   


In April 2017, Etihad Airways PJSC ("Etihad") entered into various finance agreements with Air Berlin.  This included a Facility Agreement and a Comfort Letter issued by Etihad to the directors of Air Berlin.  The Facility Agreement contained an asymmetric jurisdiction clause under which (for the benefit of Etihad only) the English courts had exclusive jurisdiction over any disputes arising out of or in connection with the Facility Agreement (including relating to non-contractual obligations).  The Comfort Letter did not contain a jurisdiction clause.

Air Berlin subsequently entered into insolvency and an Insolvency Administrator was appointed.  In July 2018, the Insolvency Administrator issued proceedings against Etihad in Germany alleging breach of the Comfort Letter and alternatively breach of its duty under German law to negotiate in good faith ("the German proceedings").  

Etihad then issued a claim in England against the Insolvency Administrator seeking (1) a declaration that the claims in the German proceedings were subject to the exclusive jurisdiction of the English Courts by virtue of the jurisdiction clause in the Facility Agreement; and (2) various declarations as to Etihad's non-liability ("the English proceedings").  Etihad also applied to the German Court for a stay of the German proceedings under Article 31(2) of Brussels Recast Regulation.

Earlier this year, the Insolvency Administrator issued an application to the English Court for a stay of the English proceedings on the basis that the jurisdiction clause in the Facility Agreement had no application to the claims which had given rise to the proceedings.


The Insolvency Administrator's application was dismissed.

Application of the jurisdiction clause
It was held that the jurisdiction clause in the Facility Agreement applied to the Comfort Letter and any non-contractual claim in connection with it, and the German proceedings therefore fell within the scope of that clause.  In reaching its decision, the Court considered the intention of the parties when entering into the package of agreements and concluded that the parties intended disputes in relation to the Comfort Letter to fall within the jurisdiction clause in the Facility Agreement.  In determining the parties’ intention, the Court considered the following factors to be of significance:

  • The jurisdiction clause was very wide and included both contractual and non-contractual obligations;
  • The Comfort Letter and Facility Agreement were part of an overall support package provided by Etihad to Air Berlin;
  • There was a good arguable case that the Comfort Letter was very closely connected to the Facility Agreement;
  • There was a good arguable case that the Comfort Letter did not create legally binding obligations;
  • There was no competing jurisdiction clause in any of the other agreements comprising the support package, all of which were subject to English law and jurisdiction;
  • It was foreseeable that the resolution of a dispute under the Facility Agreement might require the court to determine the effect of the Comfort Letter and vice versa.

The Court also applied the "Fiona Trust assumption", that the parties intended all disputes arising out of their relationship to be determined by the same tribunal (but said that it would have reached the same conclusion even if this assumption had not applied).

"Particular legal relationship" (Article 25)

For the jurisdiction clause to apply, in addition to finding that the clause applied to the Comfort Letter, Etihad needed to satisfy the condition in Article 25 of the Brussels Recast Regulation that the dispute arose "in connection with a particular legal relationship".  The Insolvency Administrator argued that the particular relationship in respect of which a jurisdiction clause had been agreed was under the Facility Agreement, and there was no inextricable linkage with the Comfort Letter.  The Court found however that this requirement was satisfied:

  • The dispute originated from the borrower/lender relationship.
  • The dispute arose in connection with a background relationship whereby Etihad was a major shareholder in Air Berlin, as part of which it provided financial support.
  • The dispute arose from the relationship created by the package of rights and obligations created in April 2017.

Asymmetric jurisdiction clause (Article 31(2))

Article 31(2) of the Brussels Recast Regulation states that "…where a court of a Member State on which an agreement as referred to in Article 25 confers exclusive jurisdiction is seised, any court of another Member State shall stay the proceedings until such time as the court seised on the basis of the agreement declares that it has no jurisdiction under the agreement."  The Court therefore had to decide whether the clause in question was a clause which "confers exclusive jurisdiction". 

The Court considered the recent case of Commerzbank v Liquimar in which it was held that an asymmetric clause was an agreement conferring exclusive jurisdiction within Article 31(2). The Court found no basis on which to decline to follow this authority, thus finding that the German proceedings should be stayed.

The Judge went on to find that even if the present case was not covered by pre-existing authority, there would have been no difficulty in finding that the clause in question contained an exclusive jurisdiction agreement for the purposes of Article 31(2):

  • The starting point is to look at the agreement which the parties have reached, and to understand the particular obligations on which the parties have agreed.
  • Air Berlin had agreed on the exclusive jurisdiction of the English Courts in respect of any proceedings which it might commence, which entailed an obligation not to sue in another jurisdiction.
  • This constituted an exclusive jurisdiction agreement, because it is exclusive against a counterparty. It conferred exclusive jurisdiction on the English Courts in the event that proceedings are brought by Air Berlin, even if there was no similar conferral for disputes in respect of which Etihad wished to commence proceedings.
  • Each different obligation falls to be considered separately – the fact that the lender is not subject to the same obligation as the borrower is neither here nor there.

Hague Convention
The Court also observed that there are good arguments that the Hague Convention on Choice of Court Agreements 2005 also applies to an asymmetric jurisdiction clause (the Hague Convention gives jurisdiction to the courts of a contracting state that have been designated in an exclusive choice of court agreement).  This is significant given that, post Brexit, parties are likely to be relying more often on the Hague Convention to enforce loan agreements containing asymmetric jurisdiction clauses.  


The case highlights the importance of considering how wide a jurisdiction clause should be, in terms of other documents, and causes of action, that it applies to. In this case, a jurisdiction clause in one finance agreement was found to cover disputes arising out of a separate document (the Comfort Letter), but the jurisdiction dispute itself could perhaps have been avoided if the wording of the clause had been drafted so as expressly to cover documents such as the Comfort Letter. The case is a reminder that it is also prudent to consider whether a governing law and jurisdiction clause should be included in all the documents that make up a transaction – even a comfort letter, which may not be intended to be legally binding, can include a governing law and jurisdiction clause.

Importantly, the English courts have again held that an asymmetric jurisdiction clause was an exclusive jurisdiction clause for the purposes of Article 31(2).  Also, the findings in relation to the Hague Convention are another indication that the English courts, at least at first instance, consider that there are good arguments that asymmetric jurisdiction clauses can qualify as exclusive jurisdiction clauses for the purposes of the Convention, despite the fact that the travaux preparatoires (official documents recording the negotiations, drafting, and discussions produced in the process of creating the treaty) for the Convention suggest that they would not. Post Brexit (at least in the absence of a deal), as between the UK and the other 27 member states, jurisdiction agreements will be governed by the Hague Convention, which gives effect to exclusive jurisdiction agreements.  If the Convention does apply to asymmetric agreements as a matter of English law that will be helpful, although there won’t be a complete answer, particularly as far as enforcement of judgments is concerned, until other courts, including the CJEU, decide how the Convention works on this point as a matter of EU law.



Rabia Ramputh

Rabia Ramputh
Legal project manager

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