Interstate disputes – Are your terms enough to guarantee you a home field advantage?
We all know that we live in the age of technology. Gone are the days where communities existed in isolation; where businesses run by mums and dads sourced their inventory from another business just down the road. Today it’s considered foolish if a business doesn’t have an online presence or the ability to sell and contract with parties in other states or countries.
The globalisation trend in business also carries ramifications when it comes to resolving disputes between parties in different jurisdictions. The general method is that businesses have standard terms and conditions that contain a “jurisdiction clause” that provides in the event of a dispute the parties will submit to an agreed jurisdiction. So in the unfortunate event of a conflict, having the security of being able to deal with a dispute in your home state is crucial as, amongst other advantages, it affords you familiarity with the local court system as well as mitigating the amount of time you need to spend away from your business to resolve the matter.
However, when things go pear-shaped, is simply relying on a standard “jurisdiction clause” enough to guarantee you a home field advantage? The short answer is no.
When Court proceedings are commenced a party can bring an application to the Court seeking those proceedings be transferred to another jurisdiction. Upon hearing that application a “jurisdiction clause” is only one of many factors that a Court must consider in determining whether it should order a transfer.
While there is no hard and fast list of relevant considerations a Court must have regard to, it has been held that the ultimate test is which Court it is most appropriate for the claim to proceed in.
Having said that, below are a few of the many considerations that a Court takes into account which may tip the scales in your favour.
Bargain of the parties
This is a reference to the agreement entered into between the parties. It’s also where you would place the “jurisdiction clause” referred to above.
However, simply having a standard terms and conditions document which includes a “jurisdiction clause” isn’t enough to bind a party to a particular jurisdiction. A Court will place weight on the following:
1. Is the “jurisdiction clause” exclusive – for example, does the jurisdiction clause expressly state that any disputes will be heard in one jurisdiction to the exclusion of other jurisdictions or does the clause simply express a preference for one jurisdiction over another.
2. Did the party relying on the terms and conditions draw particular attention to those terms and conditions when entering into the contract? For example, it may not be enough to rely on simply having the words “Please see our Terms and Conditions of Sale” in your email signature.
3. Any relevant representations made by each of the parties leading up to the formation of the contract.
Connection with the jurisdiction
Simply put, a Court will look at where it is more convenient to hear the claim. If a claim involves five witnesses who all live in a single state, then the Court will place a certain amount of weight on this fact.
The above are just a couple of the many considerations that a Court will have regard to when determining the most appropriate jurisdiction to hear an action. Ultimately though, it is up to the Court to weigh up all the relevant factors and give appropriate weight to each of them to determine where the interests of justice lie overall.
You should ensure that you have your standard terms and conditions of sale, including any “jurisdiction clause,” periodically checked by a legal professional to ensure they achieve their purposes.
If you need advice regarding a dispute you have and the appropriate jurisdiction where that action ought to be heard please do not hesitate to contact: