02 November 2010 #Dispute Resolution
We are occasionally asked whether English law will apply to foreign individuals and companies in this country. Of course, in the eyes of the law, nationality is irrelevant.
However, an English court will only make a judgment against a party if it has jurisdiction over that party. Jurisdiction is a complex idea but essentially means the area that is subject to the control of the court. This could be territorial, in the sense that English courts do not have jurisdiction in France, or subject based, in that a civil court would not have the jurisdiction to deal with a criminal case.
In England and Wales, the courts have developed common law rules for determining the circumstances when courts will have jurisdiction over companies and individuals, even if they are foreign. In addition to these traditional rules, English courts now have an obligation to employ the jurisdiction test prescribed by the EU before they can consider English common Law rules. The tests for determining jurisdiction and when they will apply are considered in more detail below.
The test for determining jurisdiction under EU law overrides English common law rules. Only where the EU law is deemed not to apply can the court consider English common law rules on determining jurisdiction. The EU test relates only to defendants since it was decided by EU legislators that defendants are in greater need of protection than claimants. The test states that where an individual or company is "domiciled" in an EU member state, he should only be sued in that member state. The rule is known as the default rule and is subject to only a few limited exceptions.
Meaning of "Domicile"
Common Law Rules
Given the above, the only circumstances where an English Court would therefore establish jurisdiction without reference to the EU test would be where an individual or company that was not based in an EU member state was sued in England.
English common law rules are considered to be some of the widest jurisdiction laws in the world since the only criterion that needs to be established is whether the defendant has some connection to the English jurisdiction. This can be as broad as the fact that the disputed contract was written in English, was signed in England or is governed by English law. These are all criteria that the English courts have held as giving them jurisdiction over the parties.
This led to many complaints from parties who felt that the basis on which the English courts established jurisdiction over them was unfair. The courts have responded by developing the common law test so that jurisdiction will still be established by establishing a connection between the defendant and the jurisdiction but the courts will also ask themselves whether there is another jurisdiction that would be more appropriate to hear the case.
For further information, please contact Adam Knee. Adam joined our Dispute Resolution team in 2010 and has an LLM in Comparative Dispute Resolution.