In a nutshell: In February 2025, the ECJ published a landmark ruling on asymmetric jurisdiction clauses, which has a direct impact on many international financing agreements. The following explains the impact of the ruling on financing practice, how the Loan Market Association is responding to it and, in addition, the position of English law on asymmetric jurisdiction agreements.

Many international contracts, particularly finance agreements, contain asymmetric jurisdiction clauses. Such clauses grant one party, usually the lender in a financing, the right to bring claims in multiple jurisdictions while binding the other party, usually the borrower, to one named exclusive jurisdiction. Such clauses give lenders flexibility to pursue enforcement where assets are located. However, it remained uncertain whether these jurisdiction clauses are compatible with European law, specifically the Brussels I Regulation (EuGVVO). The European Court of Justice (ECJ) has now addressed this question for the first time in response to a referral from the French Cour de Cassation in the case of Agora v Società Italiana Lastre (C-537/23).

The proceedings concerned a French company, Agora SARL (Agora), who purchased cladding panels from an Italian company, Società Italiana Lastre SpA (SIL). The contract stipulated that Brescia, Italy, would be the exclusive court of jurisdiction. It was set out that SIL could sue Agora "in any other competent court in Italy or abroad". Notwithstanding this agreement, Agora brought an action against SIL before the French courts. SIL argued lack of jurisdiction of the French courts on the basis of the jurisdiction agreement with Agora. This objection was unsuccessful in the lower courts. The Cour de Cassation finally suspended the proceedings and referred various questions to the ECJ concerning the validity of asymmetrical jurisdiction agreements and their application in accordance with Article 25(1) of the Brussels I Regulation.

In its judgment, the ECJ held that the validity of asymmetric jurisdiction agreements must be assessed uniformly on the basis of autonomous criteria resulting from an interpretation of Article 25 of the Brussels I Regulation, not national law (except for general grounds of invalidity such as incapacity or mistake).

With regard to certainty and substantive limits, the ECJ set out three conditions:

Firstly, the designated courts must be located in EU Member States or EFTA countries (Iceland, Liechtenstein, Norway and Switzerland). As the jurisdiction of courts in other countries is not governed by the Brussels I Regulation but by the international procedural law of the respective country, the asymmetric agreement referring to such courts violates the predictability, transparency and legal certainty sought by the Brussels I Regulation.

Secondly, the courts must be expressly designated or objective criteria must be included in the jurisdiction agreement that are so precise that the chosen court can determine its jurisdiction.

Thirdly, the clause must not violate the provisions on jurisdiction agreements within the framework of the ‘jurisdictions for the protection of weaker parties’ pursuant to Articles 15, 19 and 23 of the Brussels I Regulation or the exclusive jurisdictions pursuant to Article 24 of the Brussels I Regulation.

Response and proposal from the Loan Market Association

As a consequence of the ECJ ruling, on 5 September 2025 the Loan Market Association (LMA) published amended asymmetric jurisdiction clauses for use in financing agreements governed by German law. Whereas previously the reference was to ‘any other courts with jurisdiction’, the reference is now restricted and explicitly refers to courts within the EU or within the scope of the Lugano Convention, which have jurisdiction under Chapter II, Sections 1 and 2 of the Brussels I Regulation or the corresponding provisions of the Lugano Convention. The clause ultimately refers to the other jurisdictions under Articles 4 to 26 of the Brussels I Regulation, meaning that it must be examined in each individual case whether a lender can bring an action before the desired court in accordance with Articles 4 et seq. of the Brussels I Regulation, e.g. based on place of performance or registered seat of the borrower.

Asymmetrical jurisdiction agreements in English law

Asymmetric jurisdiction agreements have long been recognised in English law and are enforceable by English courts. Decisions such as Commerzbank Aktiengesellschaft v Liquimar Tankers Management Inc and Pauline Shipping Limited [2017] EWHC 161 (Comm) confirm this.

Under English law, for such an asymmetric jurisdiction clause to be valid, the clause must clearly express the parties' ability to choose between several jurisdictions. It must be possible to determine the competent court on the basis of objective criteria so that a chosen court can examine its own jurisdiction. A sufficient formulation is, for example, ‘any other competent court’. If, on the other hand, a court is to have exclusive jurisdiction, this must be expressly stated.

Where a dispute falls under the exclusive jurisdiction of the English court, under the 2005 Hague Choice of Court Convention an EU Member State court would be required to suspend proceedings that are in conflict with this. However, asymmetric clauses are not considered exclusive for this Convention. It is uncertain whether a court in an EU or EFTA country could accept jurisdiction despite an English law asymmetric clause on the grounds that while the clause is valid under English law, it does not comply with the ECJ’s criteria.  However, if the court with exclusive jurisdiction is not located in a Member State (e.g. England), the scope of application of Article 25 of the Brussels I Regulation does not apply. This expressly requires that a court of a Member State must have been agreed as having jurisdiction.

Implications for ship financing agreements

Lenders who have included or wish to include an asymmetric jurisdiction clause in finance agreements with an EU connection should decide how to deal with these in light of the ECJ ruling. This requires a legal assessment of whether the existing jurisdiction agreement meets the criteria of the ECJ and whether there are legal or practical considerations that can mitigate any disadvantages of uncertainty. Similarly, for all new contracts, the question arises as to the objective of a jurisdiction agreement and whether a mutually exclusive jurisdiction agreement, an asymmetric jurisdiction agreement tailored to the current ECJ case law, or the broadest possible asymmetric jurisdiction agreement best meets this objective.

The question of which court has jurisdiction may arise for lenders in ship financing transactions in several contexts: enforcement against the ship, actions for other breaches of the loan agreement, and claims brought against the lender itself. The choice of jurisdiction is therefore central, not only to ensure that the lender can pursue claims effectively, but also to prevent litigation in unfavourable forum.

(a) Enforcement against the ship

If the borrower defaults and the lender enforces the mortgage, the first step is usually the arrest of the ship. In a second step, depending on the jurisdiction where the enforcement is sought, an enforceable judgement or title is required. If it is not inherent to the ship mortgage or, as with German ship hypothecs, the shipowner did not grant an enforceable title by way of submission to immediate enforcement, an enforceable court judgement must be obtained. The lender must then decide where to obtain such a judgment. A court applying the law of the loan agreement is familiar with the chosen legal framework, but a court in the jurisdiction of arrest may be more practical, as it avoids potentially lengthy recognition and enforcement proceedings.

Traditionally, asymmetric jurisdiction clauses in ship financing allowed lenders to choose freely between these options, reflecting the international and mobile nature of ships. However, following the ECJ ruling, asymmetric clauses that select an EU jurisdiction as the specified jurisdiction and extend to all “competent courts” or to the court where the ship is located are invalid under the Brussels I Regulation, unless limited to EU/EFTA states. Such clauses will not be recognised by EU/EFTA courts.

Where proceedings are brought in a country outside the EU/EFTA, the local court will determine the validity of the clause under its own conflict of laws rules. Moreover, in many jurisdictions the arrest of the ship itself establishes local jurisdiction for the main proceedings, regardless of any invalid clause. It remains open, however, whether an exclusive or ECJ compliant asymmetric clause could restrict such jurisdiction.

(b) Legal action taken for other breaches

If the lender brings proceedings for contractual breaches unrelated to enforcement against the ship, the natural forum is usually the court corresponding to the law of the finance agreement. Ideally, the exclusive jurisdiction clause will align with that legal system.

If the loan is governed by the law of an EU Member State and designates a court in that Member State, problems may arise where the agreement also contains an asymmetric clause that does not meet ECJ criteria. In such a case, the chosen court may decline jurisdiction, unless it is established on another basis (e.g. Article 8 Brussels I or sections 12 et seq. of the German Code of Civil Procedure).

(c) Claims against a lender

From a lender’s perspective, jurisdiction clauses also protect against being sued in undesirable courts. This can be achieved through a carefully drafted exclusive jurisdiction clause, or through an asymmetric clause that complies with the ECJ ruling. If the clause is invalid, courts may assert jurisdiction based on national law or international conventions, exposing the lender to litigation in unfavourable jurisdictions.

Conclusion and recommendations for action

Whilst the ECJ ruling provides welcome clarity on the admissibility of asymmetric jurisdiction agreements in the European context questions still remain. Asymmetric jurisdiction agreements are generally valid, provided they meet the formal and substantive requirements of the ruling. However, it remains unclear whether objective criteria can be specified (e.g. place of performance, registered office of a party) that would lead to the effective jurisdiction of other courts, or whether specific country courts may also be designated as alternatives to the extent that this still meets the requirements of predictability, transparency and legal certainty sought by the Brussels I Regulation.

Article 25 of the Brussels I Regulation is inapplicable where exclusive jurisdiction is conferred on a non- EU/EFTA court, such as England, because it requires the selection of a Member State court. A different outcome may follow if the asymmetric clause instead designates a Member State court as the exclusive forum.

After the ECJ’s decision, lenders should review how they use asymmetric jurisdiction clauses and how these are drafted. For existing agreements, the key question is whether the clauses meet the ECJ’s requirements and how to manage any risks if they do not. For new contracts, lenders should decide what they want to achieve with the jurisdiction clause and whether an exclusive jurisdiction clause best serves the interests of the lender or whether an asymmetric jurisdiction clause, with its potential weaknesses and imperfections, is more effective.

If you have any questions, please get in touch with your usual contact person at EHLERMANN RINDFLEISCH GADOW or Hendrik Brauns or Rebecca Oliver.