Court of Appeal decision shows possibility of parallel proceedings inherent in asymmetric jurisdiction clauses

The Court of Appeal has found that an asymmetric English jurisdiction clause did not give the party with the benefit of the clause a right to revoke their submission to the English court's jurisdiction: Hipgnosis SFH 1 Limited v Barry Manilow [2025] EWCA Civ 486.

Although set in a non-financial context, the decision will be of interest to financial institutions for the court's discussion of asymmetric clauses, also known as "unilateral" or "one-way" clauses, used frequently in certain types of finance transactions. These clauses generally require the borrower to litigate in one jurisdiction but give the finance parties the option to litigate in any jurisdiction willing to hear the dispute. They can be useful tools for finance parties as they are flexible and keep the finance parties' options open depending on the location of the obligors' assets and the ease of enforcing a judgment in a given jurisdiction. As a result, they appear in many of the Loan Market Association (LMA) recommended forms of facility agreements.

In the present case, the clause at issue required the claimant to litigate all claims in England but gave the defendant counterparty the option of litigating certain pricing claims in the US. When proceedings were brought by the claimant in England, including in relation to pricing, the defendant invoked its option, brought proceedings in the US and disputed the English High Court's jurisdiction to hear the pricing claims. The High Court stayed the pricing claims, construing the jurisdiction clause as creating a type of "floating" jurisdiction which was somehow lost by the English court in respect of those claims when the defendant's option to bring proceedings in the US was exercised, at which point jurisdiction crystallised in favour of the US. The claimant appealed. 

In support of its analysis of how the jurisdiction clause in the agreement was intended to work, the claimant referred by way of analogy to the regular use in finance transactions of asymmetric jurisdiction clauses, citing the LMA's recommended form of asymmetric jurisdiction clause. Such clauses often provide for the exclusive jurisdiction of the English courts but give the lender (or other finance party) the option to sue the borrower in other jurisdictions. The defendant, however, argued that there were various differences between the jurisdiction clause at issue and the LMA wording, which it submitted were individually and cumulatively substantial.

The Court of Appeal, lifting the stay, firmly rejected the concept that England might have had jurisdiction when proceedings were issued but then lost it because of the exercise of the option. The Court of Appeal accepted that there were differences between the LMA wording and the asymmetric clause in this case, but found this did not detract from the correct interpretation of the clause at issue, being that it expressly contemplated that there might be parallel proceedings in England and the US. Further, although the court noted that the LMA wording expressly recognised the possibility of concurrent proceedings, and the clause at issue did not, the question for the court was whether the clause contemplated parallel or concurrent proceedings in respect of purchase price claims. On its proper construction, it did.   

As a practice point, the approach taken towards the contractual interpretation of asymmetric jurisdiction clauses sounds a cautionary note. This case acknowledges that the possibility of parallel proceedings is inherent in an asymmetric jurisdiction clause (even where this is not express, as it is in the LMA wording). If the party with the benefit of an asymmetric English jurisdiction clause wants to be able to require any English proceedings issued by a counterparty to be discontinued if it exercises its option to commence proceedings elsewhere, this will need to be clearly stated in the clause.

For more information, please see our Litigation blog post.