Can a B2C contract fairly prevent non-UK residents from suing in their home courts?
Topic: Consumer Protection
Who: Standard Bank London Limited and Mr and Mrs Apostolakis
Where: The High Court, London
When: Early 2001
What Happened:
Mr and Mrs Apostolakis lived in Greece, but entered into a consumer contract with an English bank relating to foreign exchange margin trading. The arrangements involved the payment by the Apostolakises of a deposit. The written contract which the Apostolakis couple signed with the bank provided that any dispute would be subject to the exclusive jurisdiction of the English courts. Difficulties then ensued concerning the deposit arrangements and the Apostolakis couple decided to issue proceedings against the bank. Despite the exclusive jurisdiction clause, they issued those proceedings in their home court in Greece. In retaliation, Standard Bank issued their own proceedings in England. These were based on the exclusive jurisdiction clause and sought an injunction which would restrain the couple from pressing ahead with their action in Greece.
Mr and Mrs Apostolakis defended primarily on the basis of the Unfair Terms in Consumer Contracts Regulations 1999. These regulations provide that any clause in a consumer contract will be unenforceable if it can be shown to be "unfair" by causing a "significant imbalance" in the parties' rights and obligations which is contrary to principles of good faith. In this case the Apostolakises argued that the imbalance lay in the considerable cost and inconvenience to the Greek couple of having to bring proceedings in England rather than in their own backyard, in a language that they did not speak. The court agreed. It held the jurisdiction clause to be unfair and therefore not binding on the parties, The Standard Bank injunction case was thrown out and the Apostolakises were entitled to continue their proceedings in Greece.
Why This Matters:
In the course of its judgement, the English court did indicate that any prima facie unfairness and imbalance in exclusive jurisdiction clauses might be overcome in some cases if, at or before the time that the consumer contract in question was signed, a full explanation of the effect and meaning of the relevant clause was given to the consumer about to sign. However, UK businesses who might, either on-line or off-line, be entering into contracts with consumers resident outside the UK, should take great heed. They should assume that even if a full explanation is given of the implications of the clause, any provision which seeks to require the consumer to come to the courts of the UK in connection with any dispute arising from the contract might well be unenforceable. This could even apply where a consumer is resident in Scotland and the jurisdiction clause gives the courts of England and Wales exclusive jurisdiction. To be safe, therefore, such clauses should allow for the possibility of consumers bringing action in their own local courts.
