Can you tell the difference between a choice of law clause and a jurisdiction clause?�

Maybe.  A choice of law clause provides which law governs the contract.  A jurisdiction clause determines which country's court should hear a dispute. The trouble is, telling them apart can sometimes be harder than you think. 

A licence of Irving Berlin works across the British Empire

An example of this is the first instalment of a copyright infringement action involving the Irving Berlin Catalogue. From 1947, the copyright in these works had been licensed to Chappell & Co across seven agreement for territories grandly described as “the British Empire (excluding Canada, Newfoundland, Australia and New Zealand)”.  A dispute arose between Mr Berrocal, a New Jersey resident and current licensor, and Warner Chappell, a London based publisher owned by Warner Brothers, over whether these licence agreements had been terminated and if they had ever extended to digital rights. 

What is unusual about this case is not the potential political intrigue in a court in 2017 having to determine the meaning of the “British Empire”, but the fact an English defendant challenged the jurisdiction of an English Court, facing a claim from a US litigant. 

The basis of this challenge? The following clause:

“This Agreement shall be construed and shall always be subject to enforcement pursuant to the laws of the state of New York and of the United States of America”. 

Did this mean the litigation had to take place in New York?

There was no doubt that New York law applied to the licence agreement, but did these words also mean that the New York Court had exclusive jurisdiction to determine the dispute as well?  There is no mention of “jurisdiction” or “court” in this clause but it does say that the agreement would always to be the subject of enforcement subject to New York law. That meant (according to Warner Chappell) that court proceedings themselves had to be conducted in New York under New York law.

Hacon J disagreed. What matters was what a reader of this clause would reasonably understand the words to mean. There was nothing before him to suggest the position under New York law was any different. Giving the clause the same status as an exclusive jurisdiction clause would, in his view, distort its meaning. The parties had agreed that any dispute was to be determined under New York law, but that did not prevent that dispute being heard in another court and applying New York law to it. 

Take-away points

Not a ground-breaking decision, but certainly a lesson in making sure these clause are not confused. There are normally good commercial reasons for contracting parties choosing particular jurisdictions, especially where parties are based in different countries, and equally the same applies where the parties want to remain flexible on where the proceedings take place. That can mean that the jurisdiction chosen is different to the law applying to the dispute.

Having separate and clear choice of law and jurisdiction clauses should then avoid uncertainty and potentially costly satellite litigation. 

(Berrocal v Warner Chappell Music Ltd (Unreported, 3 October 2017, IPEC))

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