March 2025 – On 27 February 2025, the Court of Justice of the European Union (CJEU) issued a key ruling in the Lastre case (C-537/23) (the Judg ment), confirming that asymmetric jurisdiction clauses in contracts are valid and in compliance with the Brussels I recast regulation and the Lugano II Convention. The Judg ment provides greater legal certainty for parties, especially in cross-border contracts, as the validity and enforceability of such clauses had been previously questioned by some national courts.
Asymmetric jurisdiction clauses allow one party of a contract to choose a competent court from jurisdiction of its choice in the event of a dispute, while restricting the other party to courts of only a specified jurisdiction. These clauses are commonly used in financial contracts, as they allow lenders (financial institutions) to initiate proceedings in a jurisdiction where the debtor’s assets are located, ensuring easier enforcement. They also serve to prevent forum shopping by restricting the counterparty from initiating proceedings in an unintended jurisdiction to gain a procedural advantage.
In its Judg ment, the CJEU clarified that asymmetric jurisdiction clauses are valid and enforceable, provided they designate courts within the EU Member States or within jurisdictions that are signatories to the Lugano II Convention. The CJEU further explained that the validity of such clauses should be assessed under EU law rather than through national legal interpretations, addressing past inconsistencies in certain jurisdictions that had questioned their enforceability. Therefore, the Judg ment does not extend to jurisdiction clauses that permit parties to select courts outside the EU and Lugano states, as those fall under national private international law rather than EU law.
Asymmetric jurisdiction clauses are commonly used in commercial contracts or in financial documentation, especially in loan agreements, capital market transactions, and other agreements in the finance sector, as they provide flexibility for financial institutions.
We recommend that financial institutions and businesses engaged in cross-border transactions carefully assess the wording of jurisdiction clauses in their financial or other contracts to ensure compliance with the principles outlined in the Judg ment or consider the incorporation of arbitration clauses.
Typical clauses that need careful consideration are for instance: “The Secured Creditors may take proceedings in any number of jurisdictions…”
The full text of the Judg ment is available at the following link.