Drafting for Governing Law Does Not Also Cover Jurisdiction
Commercial contracts contain a number of clauses that are known as 'boiler plate' - clauses that are used in many contracts regardless of the content. One such clause is the governing law and jurisdiction. Do law and jurisdiction cover the same thing?
No, ruled the Intellectual Property Enterprise Court in the case of Berrocal v Warner Chappell Music Ltd.
The contract at issue said that New York law applied to the agreement. The defendant argued that English courts did not have jurisdiction to rule on the case, on the basis that all aspects of enforcement always had to be determined in accordance with the laws of New York. New York law would not apply English procedural rules.
The judge rejected this argument. Governing law and jurisdiction clauses were different. This contract expressly provided for governing law, but was silent as to jurisdiction. Therefore, the case could be brought in the English courts. The choice of law was the same thing as the choice of forum.
Comment
This case is a reminder that governing law and choice of jurisdiction are two separate issues and both need to be covered clearly in the drafting, or there could be uncertainty. Some clauses in a contract are included without thought or dismissed as 'merely boiler plate', but if they are not drafted correctly they could end up at the centre of the dispute, before the parties can even get into the meat of the issue that needs to be decided.