Approaches to Jurisdiction Clauses in Anglophone African Common Law Countries: Principle and Policy

Pages378-399
DOI10.3366/ajicl.2019.0280
Date01 August 2019
Author
Published date01 August 2019
INTRODUCTION

Suppose that a company registered in Sierra Leone enters into a commercial contract for the sale of goods with a company registered in Kenya. Suppose further that their contract contains within it a clause by which the parties agree that disputes arising out of the contract ought to be determined by the courts of Sierra Leone.1 Where a dispute arises out of that contract and the Kenyan company, seemingly contrary to its contractual promise, institutes proceedings in Kenya against its Sierra Leonean counterpart, how should the Kenyan court approach the Sierra Leonean company's application that proceedings in Kenya be stayed?

The answer to the question posited in the opening paragraph is of great significance, jurisprudentially. It should, in a principled manner, give effect to the legal policy (regarding the enforcement of contractual promises by the court) in place in the particular country in which the court is located. Additionally, commercial parties and those drafting contracts on their behalf will rely on it when taking commercial decisions.2

This article reflects upon the various approaches which courts in Anglophone African common law3 countries4 adopt when faced with a question similar to that set out in the opening paragraph above. It does not offer any view on the legal policy which underpins the effect which courts in Anglophone African common law countries give to jurisdiction clauses. Instead, it sets out and analyses what can be gleaned from the various approaches adopted by such courts, which information can then be used to help shape and refine legal policy in the future.

In order to meet that objective, the structure of this article is as follows: first, and in order to set up the remainder of the discussion, the legal effect of jurisdiction clauses is examined; second, the need for the court to identify the exact contractual promise embodied in the jurisdiction clause is set out; and third, the approach taken in different Anglophone African common law countries to the enforcement of jurisdiction agreements construed to be ‘exclusive’5 is (i) detailed and (ii) analysed. A conclusion then follows.

THE LEGAL EFFECT OF JURISDICTION CLAUSES How the Court Is Seised of Jurisdiction

In order to ascertain the legal effect of a jurisdiction clause, it is necessary at the outset to address how, in a common law legal system,6 the court may be seised of jurisdiction. Problematic answers to this question are apparent in some of the authorities considered below; setting out the traditional common law understanding should clarify both what a jurisdiction clause (i) can do and (ii) cannot do.

Whether, in fact, a court has jurisdiction to exercise – a question which is logically prior to the question of whether it should exercise the jurisdiction which it has – is the ‘business of the legislator who laid down the law’.7 The bases on which the court may assume jurisdiction over a cause or matter are statutory in origin. The fundamental means by which the court is seised of jurisdiction over a defendant at the suit of the plaintiff is by service of process on the defendant.

The importance of this statement, especially in relation to the effect of jurisdiction clauses, cannot be underestimated. Hence, it bears repeating that service, and only service, can establish the jurisdiction of the court. The exact procedure which must be followed in order properly to effect service of process on the defendant depends on her physical geographic location. Where the defendant is within the territorial jurisdiction of the court, what the plaintiff must do in order legitimately to effect service on her will be contained within the relevant rules of court and does not involve the investigation of any private international law matters.

Where the defendant is outside the territorial jurisdiction of the court, the plaintiff will still have to serve process on her in order to seise the court of jurisdiction. However, in order so to serve the defendant, the plaintiff usually8 will have to obtain the permission of the court he wishes to seise, which permission the court may grant where the plaintiff has satisfied the material requirements found in the operable rules of court.9

The Legal Effect of Jurisdiction Clauses: An ‘Ouster’ of the Court's Jurisdiction?

A jurisdiction clause, therefore, does not establish the jurisdiction of the court;10 by the same token, it cannot ‘oust’ the jurisdiction of the court. It is true that where: (i) the court before which the matter has been brought has properly been seised of jurisdiction by the legitimate service of process on the defendant by the plaintiff; but (ii) the defendant applies either for a stay of proceedings11 or for the setting aside of the court's order granting the plaintiff permission to effect service12 on the defendant; and (iii) the defendant bases that application on a jurisdiction clause in favour of the courts of another country, the court before which proceedings are pending may be more likely to grant the stay/set aside the order by which permission to serve out of the jurisdiction was given. This, however, is very different to concluding that the jurisdiction of the court before which the matter is pending has been ‘ousted’.

This point has occasionally been overlooked. In Uganda Telecom Ltd v. Rodrigo Chacon t/a Andes Alpes Trading,13 the parties agreed that their contract should ‘be construed according to English Law and subject to the exclusive jurisdiction of the English Courts’. The plaintiff then brought proceedings against the defendant in the High Court of Uganda. In response, the defendant applied for a declaration that the court had ‘no jurisdiction over the [d]efendant in respect of the subject matter of the claim’ and for an order that the ‘suit be dismissed with costs’.

In granting the orders which the defendant sought, Arach-Amoko J accepted that the ‘High Court of Uganda has no jurisdiction to adjudicate this dispute’;14 the judge held that ‘the clause has ousted the jurisdiction of this Court.’15

Two difficulties emerge from the way in which the court's reasoning was expressed. First, because the defendant had been served with process within Uganda,16 the High Court did have jurisdiction to hear the case; it was being asked to decline to exercise that jurisdiction on the basis that the parties had promised only to sue in England. The second difficulty flows from the first: the jurisdiction clause did not, because it could not, ‘oust’ the jurisdiction of the High Court. Whatever may have been the merits of the court's eventual conclusion on the facts of the case, the way in which the reasoning was expressed was unfortunate and liable to lead to confusion.

The reasoning of the court in the Uganda Telecom case was criticised in Transtrac Ltd v. DAMCO Logistics Uganda Ltd,17 where Clause 19 of the parties' contract provided:

This agreement shall be governed, construed and enforced in accordance with English law and the parties submit to the exclusive jurisdiction of the English courts.

On the basis of this clause, the defendant sought a declaration that the court had no jurisdiction over the substantive claim which had been brought before it. Izama J eschewed the formulation employed by Arach-Amoko J in Uganda Telecom, namely that the ‘contract ousted the jurisdiction of the court’. That he was right to do so cannot be doubted. The clause simply provided a reason why the court should not exercise the jurisdiction (given to it by the legitimate service of process on the defendant) it had in both Uganda Telecom and Transtrac

The Kenyan court has also, on occasion, elided the term ‘jurisdiction clause’ with ‘ouster clause’.18 This has led to statements along the lines that the court has ‘no jurisdiction’ to determine matters brought before it in breach of said clause.19 Taking this (incorrect) view of jurisdiction clauses may colour the approach the court adopts when asked to enforce the primary20 contractual promise which such clauses contain. After all, courts guard their jurisdiction ‘jealously’.21 Viewing jurisdiction clauses as being designed to ‘oust’ that jurisdiction may well incline a court towards refusing to give effect to the primary promise contained within. The answer to the question of what effect to give such clauses is, of course, rooted in the legal policy of a particular country. That policy, and the answer which the court gives to the question of whether or not to give effect to the primary promise contained within a jurisdiction clause, ought to be determined on the basis of a proper, and properly expressed, understanding about the legal significance of a jurisdiction clause.

If Not Ouster, Then What?

The starting point ought to be that a jurisdiction clause is a term of the parties' contract (or may be contained in, or constitute the entirety of, some other agreement between them). Jurisdiction clauses thus ‘contain promises which give rise to private law rights’.22 To demonstrate this, suppose a clause in the parties' contract is construed23 to mean that the courts of Ghana are to have exclusive jurisdiction over disputes arising out of that contract. By such a clause, the parties promise that they will submit to the jurisdiction of the Ghanaian courts and will not seise of jurisdiction a court in another country;24 in other words: the court named in the clause will be the only court seised of jurisdiction by the plaintiff. Where one party then breaches that contractual promise by instituting proceedings in, say, Nigeria, the question for the Nigerian court is whether to hold the parties to their contractual bargain (in effect whether to enforce the primary contractual right of the party who has assumed the role of defendant before the Nigerian court) by refusing to exercise any jurisdiction it has.25

CONSTRUCTION OF JURISDICTION CLAUSES The Theoretical and Practical Importance of Construction

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