Third party rights and jurisdiction clauses - Campeau v Gottex Real Asset Fund 1 (OE) Waste [2025] EWHC 2322

In this judgment the English Commercial Court considered the operation of the Contracts (Rights of Third Parties) Act 1999 (the “Act”) and whether the claimant, Mr Campeau (the third party), was able to rely on an exclusive English jurisdiction clause in a sale and purchase agreement (the “SPA”) because of the rights conferred to him under the Act, or on the basis of  contractual construction.

Mr Campeau had commenced proceedings by serving a claim form on Gottex Real Asset Fund 1 (OE) Waste S.A.R.L (“OE Waste”) outside England and Wales without the court’s permission. In response, OE Waste sought to set aside service of the claim form on it. Part of the court’s decision was focussed on CPR 6.33(2B) - which will be of particular interest to litigators. However, this article focusses on the court’s broader decision about whether a third party can rely on an exclusive jurisdiction clause in a contract to which it was not a party.

Background

The agreement at the heart of the dispute was an SPA, made between OE Waste and Geco Holdco Limited pursuant to which OE Waste sold the entire share capital of a separate target company (the “Target”). At the time the SPA was signed, Mr Campeau was a director of the Target. 

Following the sale, OE Waste brought legal action against Mr Campeau in the Luxembourg courts, alleging that the Target had been sold at an undervalue and that Mr Campeau had acted negligently, or otherwise in breach of his duties in connection with the negotiation of the SPA.

Mr Campeau filed his response contesting the jurisdiction of the Luxembourg courts and contending that OE Waste lacked standing to commence the proceedings. He also described his “more fundamental objection” to OE Waste’s claim, namely that it was brought in breach of Clause 10.3 of the SPA, which provided that the parties to the SPA were prohibited from bringing claims against the Target, including Mr Campeau as a director, for matters arising out of or in connection with any transaction document, including the SPA. That clause was expressly stated to confer a benefit on third parties for the purpose of the Act. 

The SPA also contained an exclusive jurisdiction clause in favour of the courts of England and Wales:

“Each Party irrevocably agrees that the courts of England and Wales will have exclusive jurisdiction to settle any dispute which may arise out of or in connection with this deed (including any dispute relating to any non-contractual obligations arising out of or in connection with this deed) and that accordingly any proceedings arising out of or in connection with this deed (including any proceedings arising out of or in connection with any such non-contractual obligations) shall be brought in such courts.”

Mr Campeau claimed that because any claim against him in respect of the SPA would comprise a dispute over the scope of Clause 10.3, the exclusive jurisdiction clause required any such claim to be brought against him in England and Wales. 

Proceedings in the English Courts 

Mr Campeau sought, amongst other things, (i) a declaration that OE Waste had waived its right to bring the claim initiated in the Luxembourg courts (on the basis that Clause 10.3 of the SPA prevented it from doing so), and (ii) an injunction requiring OE Waste to discontinue the Luxembourg proceedings. Mr Campeau served the claim form on OE Waste in Luxembourg.

OE Waste sought to set aside the service of the claim form on it by Mr Campeau (which were the proceedings which this case is concerned with) on the basis that the claim form had been served outside the jurisdiction of England and Wales without the court's permission – something that was only legally possible if Mr Campeau could rely on CPR 6.33(2B) by virtue of  the exclusive jurisdiction clause. 

OE Waste argued that only a party to the contract or an assignee could enforce that clause. As Mr Campeau was not a party to the SPA, there was no other basis, either under the Act or by construction of the contract, that he could rely on the exclusive jurisdiction clause. OE Waste compared the wording of Clause 10.3, which expressly conferred third party rights, to the exclusive jurisdiction clause which did not. Finally, OE Waste argued that the Act was not intended to deal with jurisdiction clauses and therefore Mr Campeau could not rely on it to support his claim.
Mr Campeau’s response was that the question wasn't so much whether he could enforce the exclusive jurisdiction clause, but rather whether by virtue of that clause, OE Waste had agreed that disputes between it and Mr Campeau relating to the SPA should be subject to the English courts. Even if he was wrong on that point, he argued that the statutory effect of the Act applied the exclusive jurisdiction clause to his claim. He also argued that the rights conferred on him by Clause 10.3 included an entitlement to have those matters litigated in England and Wales.

Contractual Interpretation of the EJ clause

The court determined that Mr Campeau was in theory entitled to serve his claim outside the jurisdiction without the court’s permission so long as his claim fell within the scope of the exclusive jurisdiction clause. This was ultimately a question of contractual interpretation. The court held that in the absence of express wording to the contrary, the starting point when interpreting a jurisdiction clause is that only the parties to the contract are covered. However, the court observed that in certain situations, when considering the contract's terms in their entirety along with the nature of the relationship between the parties and any relevant third parties, the interpretation of the exclusive jurisdiction clause may extend to include third party claims. 

That was the position the court took in this case; the rationale being that the exclusive jurisdiction clause was very broadly drafted to cover any dispute which may arise out of or in connection with the SPA. In particular, the court held that a dispute about the scope of Clause 10.3 could readily be said to be a “a dispute arising out of or in connection with the SPA”.

The court also considered the commercial context of the SPA, noting that Clause 10.3 was intended to provide comfort to the directors of the Target, and the parties would not reasonably be understood to have wished or agreed that warranty claims and any resulting contribution claims and defences under Clause 10.3 would be resolved by courts in different jurisdictions. For these reasons, the court held that Mr Campeau, as a third party, could rely on the exclusive jurisdiction clause to bring his claim.

Application of the Act

Having reached the conclusion that Mr Campeau could rely on the exclusive jurisdiction clause based on the wording and interpretation of the contract, the court considered the potential application of the Act in obiter remarks.  
The parties’ arguments focused mainly on Section 1(4) of the Act which provides: 

“This section does not confer a right on a third party to enforce a term of a contract otherwise than subject to and in accordance with any other relevant terms of the contract.” 

One of the key questions was whether the exclusive jurisdiction clause was a “relevant term” of the contract. Mr Campeau argued that the meaning of Section 1(4) was that a third party exercising its rights under the Act must sue in accordance with the contract’s dispute resolution provisions. OE Waste argued that the Act was never intended to deal with jurisdiction clauses and was intended to confer benefits on third parties and not, as a general matter, to subject them to burdens such as jurisdictional requirements.  It argued that the only exception to that rule should be where the parties had expressly stated that such burdens should be passed on.  The court agreed with Mr Campeau concluding that the there was no reason why jurisdiction clauses should be excluded under the Act.  
The court also relied on the principle of conditional benefit, that a third party wishing to take the benefit of a contract must do so in accordance with the contract’s terms. Looking at Clause 10.3, the court held that this clause specifically conferred rights on Mr Campeau and there were no other references in the SPA to alternate jurisdiction clauses where those rights could be enforced. The only jurisdiction clause was in favour of the courts in England and Wales. 

Accordingly, the court concluded that Section 1 of the Act, coupled with Clause 10.3 and the exclusive jurisdiction clause, meant that Mr Campeau was obliged to bring his action to enforce his rights under Clause 10.3 in accordance with the exclusive jurisdiction clause in the courts of England & Wales.

Key Takeaways

The parties ended up in court in part because the contractual exclusive jurisdiction clause did not make express reference to third parties. This illustrates the importance of careful drafting. Drafters should consider the position of third-party rights and be explicit about whether they wish third parties to be bound (or not) by the jurisdiction clause in their contract. Exclusive jurisdiction clauses containing wording such as “arising out of or in connection with” may be sufficient to bind third parties. 

The judgment also provides important obiter comments regarding the potential application of the Act to third parties seeking to rely on dispute resolution provisions in contracts.