gurkaran singh (student) 27 January 2012

Fictitious case

“A”, an IT company in developing country named Charland, enters into a contract with “B”, an IT company in developed country named Ostia. Contract is for “B” to complete an unique software and provide with service of fine engineers to clients which was beyond the capabilities of even finest engineers of “A” as the software was too complex. It was in the agreement that ownership rights will remain with “A”. It was also in agreement that any dispute arising will be taken to Courts of Bronton and Bronton will have exclusive jurisdiction. As Bronton’s dispute resolution system was famous for its fairness and incorruptibility. Bronton is a 3^rd country in the case having nothing to do with parties in contract.

Then arises the dispute during profit sharing due to different interpretation of complex language by “A” and “B” of the profit sharing clause in agreement. Their was also dissatisfaction of providing poor services by “B”.

“A” institute proceedings against “B” for in Charland, of which judgment turns out in favor of “A”.

“B” files a review application as their was a negligence on part of B’s lawyer. This application was dismissed.

“B” then instituted proceedings in Bronton. Which turned out in favour of “B”.

Now “A” appeals in higher court of Bronton.

QUESTIONS

What does the law says, and in what clause, about the following questions:-

1. According to “Private International Law”, can parties of a contract make a 3^rd country exclusive jurisdiction in contract, just because the 3^rd country is famous for having fair and incorrupt dispute resolution system and shares close relation with country of party “B”?

If yes, then will the judgment made in Charland be considered? Should party “B” follow the orders of judgment given in Charland?

If no, then what should be the jurisdiction? And, will the wrong jurisdiction decided in contract make the contract void?

2. According to “International Commercial Law”, is it lawful for a party terminate the contract by itself on dissatisfaction of services despite few warnings, which was breach of some clauses from other party, when in agreement it was mentioned that any dispute arising will be taken to Court in Bronton?

3. If the language of signed agreement is complex for profit sharing and can be interpreted in two ways, can the pre-contract negotiation conversation be admissible which was accepted by both parties?

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N.K.Assumi (Advocate) 27 January 2012

In such matters the parties can conferred a foreign court a neutral country though having no jurisdiction of the subject matters, but by their own agreement. Such juridiction can be conferred whether famous or fair but by the parties of their own accord. Even in such case if one of the party approach another court in spite of the court of their choice, the party approaching such court must established forum of choise is forum non convenience or the proceedings in that court is oppressive or vexatious depending on the facts of each case.

In regards to ambigous language in the agreement it all depends on the documents, which has to be translated for both the parties and reading the documents as a whole it has to be interpreted and give its natural meaning to the agreemnet.

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