In the sphere of international commercial contracts, the choice of the competent court for conflict resolution is one of the most relevant covenants between the parties. Through so-called choice-of-court covenants, the parties expressly designate the judicial body that shall hear any dispute arising from the contract. This power to agree upon a specific forum falls within the context of the principle of free will, recognised and protected both under private international law and the European Union’s legal system.
This type of covenant or clause can be ‘symmetrical’, that is, that they oblige both parties to be subject to the same court or courts. However, they can also be ‘asymmetrical’, for instance if only one of the parties is given the possibility to appear before various judicial bodies, whilst the other party is limited to just one.
The validity of these clauses has been subject to doctrinal and jurisprudential debate for years, especially in European doctrine in relation to its compatibility with predictability and legal certainty that underpin EU Regulation 1215/2015 (henceforth the ‘Regulation’).
The central issue is whether such covenants, because of their unbalanced or imprecise nature, can be considered null and void. Below we shall present what the Regulation says and the European Court of Justice’s recent interpretation of it (henceforth, the ‘ECJ’).
The EU’s legal framework:
Article 25 of the Regulation sets out that, if the parties have agreed that the judicial body or judicial bodies of a Member State are competent to deal with any disputes which may have arisen or which may arise in connection with a particular legal relationship, such court or courts shall have jurisdiction unless the covenant is automatically void in relation to its material validity under the law of that Member State. This competence will be exclusive, unless otherwise agreed by the parties. The choice-of-court covenant must be carried out in writing, verbally and with written confirmation, or in a way that conforms with the habits or usages of the international commercial sector.
The Regulation thus recognises the parties’ free will to agree upon a competent forum, but introduces material and formal limits, as well as the possibility that the covenant be declared null and void in relation to its material validity under the national law of the designated forum.
ECJ Case Law
The first chamber of the ECJ recently ruled in its Judgement of the 27th of February 2025 (Matter C-537/23) Società Italiana Lastre SpA (henceforth ‘SIL’) vs. the French company Agora SARL (henceforth ‘Agora’). This judgement unifies the interpretative criteria of the aforementioned article 25 of the Regulation in relation to the validity of asymmetrical choice-of-court covenants.
The clause in question reads as follows:
“The court of Brescia (Italy) will have jurisdiction over any dispute arising from or relating to this contract. SIL reserves the right to bring proceedings against the purchaser before another competent court in Italy or elsewhere”.
The asymmetry can be found in the fact that one of the parties, the Italian company (SIL), reserves the right to make a claim against the French company (Agora), before any competent court, in any other country. However, the French company may only do so before the courts of Brescia.
The ECJ then considers the validity of this clause in accordance with the Regulation,
either because of its imbalance or ‘asymmetry’ between the parties caused by this clause or because of its vagueness.
Asymmetrical choice of court
The asymmetry in this type of clause is common and it is consolidated in commercial practice between international commercial agents. It is true that this asymmetry is often discussed both in the ECJ and in the various national courts of the Member States. However, the ECJ is clear and in this judgement, it settles this question by basing its validity on the free will of the parties, a principle that is not only enshrined in the legal systems of the Member States, but also in the Regulation itself.
Requirement for precision
The vagueness around the competent court raises further problems. In particular, the ECJ sets out that this type of clause must identify in a sufficiently precise manner the objective elements on which the parties have agreed in order to designate the competent court or courts. One cannot nominate such a vague formula as ‘any other court elsewhere’ as the competent court. This would cause great legal uncertainty for the other party, who cannot foresee or know which court or courts are the competent forum. Notwithstanding the above, such ambiguities are not uncommon.
The ECJ therefore establishes that, if through this drafting the meaning of the clause refers to the ability to litigate in any other court in the world then the clause is void because it breaches the principle of “Precision” required by the aforementioned provision, as well as the general principles of legal predictability, transparency and security that the Regulation sets out. This requirement for precision is essential to guarantee legal predictability and security, allowing the judge and the parties to have a clear understanding of the relevant forum.
However, it is quite striking that the ECJ accepts those clauses that, while still being broad, limit the alternative courts to those of the Member States of the EU or the states in the Lugano convention II as sufficiently precise.
This distinction is debatable to say the least. If the clause is vague or indeterminate, why should it be considered valid simply because it refers to a particular set of countries? The predictability and transparency should be evaluated independently of the geographic area to which the alternative court belongs. The generic reference to ‘other competent courts in the EU’ or ‘within the scope of the Lugano Convention’ may continue to be ambiguous if it is not specified which courts are being referred to.
However, the ECJ seems to introduce here a criterion, we suppose, based on the degree of integration and harmonisation between EU countries and those of the Lugano Convention. The implicit argument is that the standards of legal protection and legal cooperation in these countries mitigate the risk of legal insecurity, even if from a purely logical and legal perspective, this distinction is questionable.
Conclusion
According to the doctrine established by the ECJ, the asymmetrical choice-of-court covenants are valid pursuant to the Regulation provided that:
- The objective elements that allow for the competent court or courts to be identified are set out;
- In case of broad wording, the alternative courts are limited to EU Member States or parties of the Lugano Convention II;
- They do not infringe upon the imperative dispositions of the Regulation in relation to specially protected matters (consumers, workers, insurance) or those relating to exclusive competence.
The asymmetrical character of the clause does not, on its own, constitute a cause for nullity, with the parties’ free will prevailing. However, the requirement of precision is essential, since, without it, says the ECJ, the clause is null and void, as it is contrary to the principles of legal predictability, transparency and certainty provided for in the Regulation.
Julio González
Vilá Abogados
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9th May 2025
