New French Case On Choice Of Court Agreements

Friend of Letters Blogatory Gilles Cuniberti recently posted on an interesting new decision of the French Cour de cassation on choice of court agreements under Article 23 of the Brussels I regulation.1 The case involved a dispute between a depositor and her bank. The agreement between the two provided that the depositor could sue the bank only in the courts of Luxembourg, but that the bank could sue the depositor anywhere it chose. The French court held that the clause was unenforceable against the depositor, because under French law it was potestative (which, if I understand Gilles’s post rightly, is roughly equivalent to saying that the agreement was void because the bank’s promise was illusory).

I agree with Gilles that the case is interesting insofar as it implicitly holds that the validity of the choice of court clause is to be determined by French law rather than with reference to Brussels I itself. If and when the Hague Choice of Court Convention comes into effect, similar issues may arise in the United States.

Another issue that could arise in the US, if and when the Convention comes into effect, is whether the choice of court agreement within a larger contract has to be treated as a separate contract, as an arbitration clause is treated. It seems to me that for a case in the US to come out the way the French case came out, the choice of court agreement would have to be treated as a separate contract. For then it would make sense to consider whether the bank’s promise was illusory and the separate contract was void for lack of consideration. But surely the bank had given consideration for the contract as a whole.

  1. Article 23(1) provides:”If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise.”

One response to “New French Case On Choice Of Court Agreements”

  1. In Europe, the issue of the separability of the choice of court agreement was addressed by the European Court of Justice in 1997 in the Benincasa case. The Court held that the choice of court agreement is to be treated as a separate contract. The Brussels I Regulation, which will be amended in the coming months, should include a new express provision to that effect.

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