Avoid costly disputes – regulate jurisdiction clauses in your international agreements

When Swedish companies enter into agreements with foreign parties, it's easy to focus on the deal – but what happens if a dispute arises? Without clear rules about which country's courts (or whether it should be an arbitral tribunal) should handle potential disputes, and which law should apply, you risk a costly and protracted process in an unfamiliar legal system. Here, Lindahl's experts review the importance of jurisdiction clauses and provide a real-life example.

Why jurisdiction clauses are important

If your agreement lacks regulation of competent forum, the question is determined according to complex rules on private international law. The result may be that the process is delayed and that your Swedish company is forced to litigate abroad – with increased costs, practical difficulties and, in the worst case, a legally uncertain trial.

A real example

Lindahl recently represented a Swedish company in a protracted process against a foreign counterparty. The foreign company claimed that the Swedish court did not have jurisdiction and requested that the action be dismissed. The courts then had to interpret the meaning of a disputed contractual term, where the parties had different views on whether it constituted an agreement on court jurisdiction. We successfully assisted the Swedish company, which was granted the right by all legal instances to have its case tried by a Swedish court.

Three things to consider:

Predictability creates security
Without an agreement on competent forum, courts in several countries may have jurisdiction. A well-drafted jurisdiction clause clarifies both which country's court should try disputes and which law should apply.
The regulatory frameworks are complex
Many factors affect which court will have jurisdiction. Agreeing on this in advance eliminates uncertainty and gives you control over the process.
Avoid delays
Objections regarding court jurisdiction can delay a process considerably. The court must first examine its own jurisdiction before the substantive examination can begin – a clear clause reduces the risk of such procedural disputes.

Does your company have cross-border agreements?

Lindahl has extensive experience of international disputes and can help you secure your agreements. Contact our experts in dispute resolution for advice on private international law.