While an A-Z of Construction Law cannot expect to cover all angles, I would take issue with a point made by Michael Conroy Harris in his latest chapter – J for Jurisdiction (5 September page 63).
He advises against accepting a foreign jurisdiction for the settlement of disputes as “it may prove to be more time-consuming and costly”.
Apart from the fact that litigation costs in England are much higher than most other jurisdictions, there is a more important factor to consider in a cross-border contract. This is – where’s the money?
If, say, an English contractor has a contract with a client outside Europe, the contractor may be tempted to insist on having disputes heard in the English courts, but that could prove to be a costly mistake. Even if the client submits to the jurisdiction, should it fail to pay any damages or costs awarded against it, and has no assets in the UK, the contractor will have to start proceedings for enforcement of the award in the client’s home country. This, in turn, may result in it having to bring the action all over again, with all the cost and time delays that that entails.
Both governing law and jurisdiction need careful consideration when entering into a contract, and practical considerations can be just as important as legalistic ones.
Giles Dixon, solicitor