25.10.13 The High Court confirms a Contract can be made in two different jurisdictions

One of the most fundamental questions of law is whether a given court has jurisdiction to preside over a given case. A High Court decision confirmed that when negotiations are complex, a contract can be made in two jurisdictions.

In May 2005 Conductive Inkjet Technology (CIT), and English company, and Uni Pixel Displays (UPD), a Texan company, entered into a non-disclosure agreement. The agreement involved the use of CIT’s technologies for the 2005 NDA project, which contained no governing law or jurisdiction clause.

Proposals were sent between the two companies in 2006 where neither proposal contained a governing law or jurisdiction clause. Further contact was made in 2010 amongst the two companies where the parties entered into a further non-disclosure agreement (the 2010 NDA). The governing law clause for the 2010 NDA was the laws and state of Texas.

CIT issued two sets of proceedings against UPD in English courts for a breach of confidence of the 2005 NDA, as well as declarations pursuant to the Patents Act 1977. One of the issues before the English court was whether the court should exercise jurisdiction over UPD in respect of  the 2005 NDA which contained no governing law or jurisdiction clause.

The evidence regarding the 2005 NDA was that UPD has sent the final documents via email which CIT had agreed to print and sign and send back. In the final version UPD had not accepted CIT’s request for the governing law and jurisdiction provisions, therefore both parties decided to leave out any such provisions.

The judge concluded the parties had agreed not to incorporate a choice of law or jurisdiction clause; therefore it would be artificial to determine the place of making of a contract. The judge found CIT had an arguable case that the 2005 NDA was made in England and Texas. The judge concluded that establishing a sufficient connection to the jurisdiction would be arbitrary on the basis of the order in which the document was signed. In doing so, the judge applied the reasoning set out in Apple Corps v Apple Computer [2004] EWCH 768(Ch). 

This decision highlights;

• There is an increasing use of emails and telephone calls in international business; therefore if there is a dispute over where a contract is formed a court will hold it was in both jurisdictions.

• Where there are no jurisdiction clauses, in order to engage the jurisdiction of a particular court the parties may need to rely on where the contract was made.

• Including a jurisdiction clause assists in limiting uncertainty.

• How failure to include a jurisdiction clause can lead to expensive court battles solely focused on jurisdiction.