When piecing together a contract, an often neglected but incredibly important area (quite literally) is jurisdiction and it seems wild to want to travel the world to fall out – or challenge the contract in court.
Let’s strip this back, what is jurisdiction? Quite simply, it’s the location in which your contract is legally defined and establishes what country’s law the court will hear a claim brought under the contract in question, i.e. an English court will not see a Scottish contract and vice versa.
So how do you choose jurisdiction? Well, if something were to go wrong, where do you want to sort it out any potential dispute and what law do you want to apply?
If the majority of your business takes place within your own country, it’s a no brainer! So why do so many people skim this clause and want to head elsewhere to go to court? It very quickly becomes expensive if you have to source a lawyer in a different country, never mind travel costs associated with choosing the different jurisdiction. However, in some cases the Jurisdiction is imposed upon the business as part of the negotiation, so this issue is not clear cut.
If a court does not have jurisdiction to hear your case, you will be sent packing and in the unlikely event that a court starts to hear a case outside the jurisdiction, it would have to be stopped and transferred to the correct jurisdiction which then may result in potential delays to a case and more expense all round.
In an English court, an English magistrate or judge will not be able to pass judgement on a Scottish contract and vice versa, this can become even more complicated when you start moving out with the UK and particularly with more complex cases that need to be taken somewhere with a more experienced judge.
Choosing your jurisdiction strategically may benefit you, should a claim arise. For example, a contract bound under Scottish Law dealing with an American client. Should a claim be made under the contract, the U.S party would need to source a Scottish lawyer and incur massive costs travelling to and staying in another country which in turn might be too much effort for a claim (depending on the severity of it).
In a nutshell, where possible the law should be practical, so choose your jurisdiction to minimise cost, travel and keep your energy for what matters to you.
Would you like to chat through your options and get your queries answered? Arrange a call with David using the calendar below and he will be delighted to connect with you.