ADMINISTRATIVE LAW DIVISION
In a time like the present, marked by globalization, the conclusion of international civil and commercial contracts is common. This trend has led to an increase in contractual litigation, making the rules on international jurisdiction essential, as they determine which national courts are competent to resolve disputes.
At the European level, these rules are regulated by Regulation (EU) 1215/2012 (“Brussels I bis Regulation”). One of its most significant advances is the recognition of express jurisdiction clauses, set out in Article 25, which allow the parties to agree on the jurisdiction of the courts of a Member State, regardless of their domicile, provided that the agreement is formally valid and there is an element of internationality in the legal relationship.
The judgment of the Court of Justice of the European Union in Case C-566/22 (Inkreal) has resolved a question that had not previously been addressed in this field:
- Whether, under Article 25, a jurisdiction clause in favor of the courts of another Member State is valid in a dispute between parties domiciled in the same State.
The case concerned two Slovak companies that had agreed to submit their disputes to the courts of the Czech Republic. In the absence of other international elements, the Czech Supreme Court referred the preliminary question to the CJEU.
The CJEU answered in the affirmative, considering that the mere choice of a foreign court may, by itself, constitute the element of internationality necessary to apply Article 25.1 of the Brussels I bis Regulation, basing its answer on:
- The purpose of the European judicial cooperation system,
- The principle of party autonomy,
- The guarantee of legal certainty,
- Mutual trust between the courts of the Member States, and
- Compatibility with the 2005 Hague Convention.
As a result of this interpretation, new strategic possibilities open up in the negotiation and drafting of international contracts, with especially relevant practical implications:
1. Expansion of room for maneuver in negotiation
Since no connection is required between the chosen forum and the parties or the contract, the choice-of-forum clause becomes a bargaining chip in contractual negotiations. This greater flexibility expands the parties’ room for maneuver, allowing them to use the forum as another element of trade-off, adapting it to strategic interests and priorities.
2. Tactical use of forum to protect interests
The landscape opened by Inkreal allows parties to choose jurisdictions that are more predictable, efficient, aligned with their interests, or with more consolidated case law in the relevant field. This is especially valuable in sectors with high litigation rates or sophisticated contracts (such as M&A, distribution, or franchise agreements), where the choice of forum can directly affect the speed and outcome of proceedings.
3. Costs of litigating abroad
However, this freedom of choice also requires careful assessment of the costs associated with litigating in the chosen forum. It is not enough for the court to be favorable or efficient; it must also be reasonable in economic and logistical terms. Otherwise, the clause may become a deterrent or even a source of contractual imbalance, especially for the party with less capacity to bear the costs of international litigation.
4. Consolidation of litigation in a single jurisdiction
Inkreal also opens the door to consolidating disputes in a single jurisdiction, which is useful in M&A transactions carried out between multinational groups operating through subsidiaries located in the same State. In these cases, the parties can agree that disputes arising from the different contracts will be resolved before the courts of the parent company’s State, avoiding procedural fragmentation and gaining efficiency, coherence, and legal control.
5. Assessing reputational or commercial impact
Finally, the choice of forum can also have reputational and commercial implications. Proposing foreign or perceived-as-complex courts may generate distrust in the counterparty or send signals about the company’s approach to dispute resolution. This strategic dimension must be carefully assessed, as it may influence market perception or that of future partners. At the same time, this trend strengthens the role of
international commercial courts, which are becoming consolidated as attractive forums for resolving transnational disputes, reinforcing their legitimacy and specialization.
In short, Inkreal redefines forum selection as a strategic tool in contractual negotiation. Its use requires rigorous legal, economic, and reputational analysis in order to maximize advantages without undermining contractual balance.
