How to Draft A Valid Jurisdiction Ouster Clause

Introduction :

1.  Part I (Suits In General) of the Code of Civil Procedure, 1908 (‘the Code’) provides for jurisdiction of the Courts and Res judicata. The term ‘jurisdiction’ means the authority to enforce laws or pronounce legal judgments.  Section 9 of the Code provides, inter alia, as follows :

 “The Courts shall have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred.”

1.1       Part I of the Code provides for “Place of suing” in sections 15 to 25 of the Code. For the detailed provisions of these sections the readers are requested to refer the Code. However, the heading of the relevant sections of this chapter are reproduced below for ready reference:

Section 15.   Court in which suits to be instituted.

Section  16. Suits to be instituted where subject-matter situate.

Section  18. Place of institution of suit where local limits of jurisdiction of Courts are uncertain.

Section  19. Suits for compensation for wrongs to person or movables.

Section 20. Other suits to be instituted where defendants reside or cause of action arises.

Section 21. Objections to jurisdiction.

1.2       For better understanding of the subject, Section 17 of the Code is reproduced below for ready reference :

Section 17.   Suits for immovable property situate within jurisdiction of different Courts:  “Where a suit is to obtain relief respecting, or compensation for wrong to immovable property situate within the jurisdiction of different Courts, the suit may be instituted in any Court within the local limits of whose jurisdiction any portion of the property is situate.

Provided that, in respect of the value of the subject matter of the suit, the entire claim is cognizable by such Court.”

Therefore, it is explicit that more than one Court may have jurisdiction in respect of the same subject matter as per the circumstances of the particular case. In such a situation, the parties may enter into an agreement and confer exclusive jurisdiction on one of the Courts, having jurisdiction as detailed above, and at the same time oust the jurisdiction of other Courts, which may also have jurisdiction on the subject matter as provided in the Code. With a view to draft  such a jurisdiction ouster clause, some principles have been culled from the following judgments.

2.The Supreme Court in A.B.C. Laminart  Pvt. Ltd. Vs. A.P. Agencies, (1989) 2 SCC 163 = AIR 1989 SC 1239, held thus “From the foregoing decisions it can be reasonably deduced that where such an ouster clause occurs, it is pertinent to see whether there is ouster of jurisdiction of other Courts.  When the clause is clear, unambiguous and specific, accepted notions of contract would bind the parties and unless the absence of ad idem  (which means ‘a common understanding between the parties’) can be shown, the other Courts should avoid exercising jurisdiction.  As regards construction of the ouster clause when words like `alone’, `only’, `exclusive’ and the like have been used there may be no difficulty.  Even without such words in appropriate cases the maxim `expressio, unius est exclusio alterius’ -which means ‘expression of one is the exclusion of another’ – may be applied.  What is an appropriate case shall depend on the facts of the case.  In such a case mention of one thing may imply exclusion of another.  When certain jurisdiction is specified in a contract an intention to exclude all others from its operation may in such cases be inferred.  It has therefore to be properly construed.”

3.The Allahabad High Court, Lucknow Bench, following aforesaid judgment of Supreme Court, in U.P. Co-operative Sugar Factories Federation Ltd., Lucknow and others  Vs. P.S. Misra, Gorakhpur and another 2003 Arb. W.L.J. 345 (All) held thus (in para 13): “The proposition of law with respect to the determination of jurisdiction can thus be concluded by observing that if there is a specific clause in the agreement which confers jurisdiction exclusively on one Court and excludes the jurisdiction of other courts, though they may be having otherwise jurisdiction to entertain the matter, shall be binding between the parties and such a clause would not be hit by Section 23 or Section 28 of the Contract Act. The exclusion or ouster of jurisdiction of one or the other Courts, if the action can be brought in various Courts, confining it to only one Court, is to be gathered or inferred from the language used in every agreement and on the facts and circumstances of each case. In the cases where in the agreement the expression like `alone’, `only’, `exclusive’ or the like are used, it call for no mandate for determination of the jurisdiction of the Courts but where such words are lacking, the sum and substance of the agreement clause regarding jurisdiction has to be seen and  interpreted so as to achieve the aims and objects of the clause and the interpretation should be such which neither extend the jurisdiction to such an extent (normally to such Courts) which the jurisdiction clause does not permit nor it should be read in the manner so as to exclude the jurisdiction  of other Courts, as the case may be, if otherwise such Courts are having jurisdiction and the agreement clause does not intend to oust their jurisdiction or the agreement clause does not even by inference means ouster of jurisdiction of other Court / Courts.”

The aforesaid principles declared by Supreme Court and the Allahabad High Court should be kept in view while drafting a Jurisdiction Ouster Clause in the Agreements, Sales invoices and Purchase Orders etc. Otherwise the ‘Jurisdiction Ouster Clause’ may not be enforceable.(END)

Note: the views expressed are my personal and a view point only.

Author:

Narendra Sharma, Consultant (Legal)

E-mail: nkdewas@yahoo.co.in