In order to avoid difficulties in resolving disputes, the parties can agree in advance by which court and in which jurisdiction they will be considered. For this, a derogational or prophetic agreement is concluded. Case studies show that the design of this document really allows for unhindered conflict resolution.
The meaning of legal construction
Propagation and derogation agreements may be executed exclusively within the framework of contractual jurisdiction. The choice of court and jurisdiction is determined by practical considerations. These agreements are executed by the parties to foreign trade transactions. In order not to incur significant costs and not waste time, participants in legal relations choose the most suitable option for them in the event of a conflict.
The essence of the agreements
A proprietary agreement on the choice of an arbitration court is a document by virtue of which a dispute beyond the jurisdiction of this court becomes jurisdictional. Simply put, the parties by their decision, as it were, expand the competence of the court.
The derogation agreement, on the contrary, narrows the scope of jurisdiction. In accordance with it, a dispute, the resolution of which is within the competence of this instance, is transferred to another authorized body.
Important point
A proprietary agreement must be distinguished from an arbitration agreement. In accordance with the latter, the dispute may be referred to the arbitral tribunal.
These legal constructions have significant differences and exist parallel to each other. The rules for their application in relation to participants in foreign trade transactions do not match. Moreover, the arbitration agreement relates to the activities of the public court, and the proprietary agreement is considered as an object of regulation of the norms of state justice.
Limitations
Contract jurisdiction is officially fixed in the legal systems of most countries, including the Russian Federation. Based on it, by agreement of the parties, consideration of a specific dispute may be attributed to the competence of a foreign court, although according to national legislation it is jurisdictional to the local court. Moreover, for the implementation of these provisions in practice, as a rule, special intergovernmental agreements are concluded and conventions are developed (Chisinau, Brussels, etc.).
Meanwhile, national rules may provide for separate exceptions for certain categories of disputes. For example, in the domestic procedural legislation there is a provision that the parties have the right to change by mutual agreement the territorial jurisdiction, if the case does not fall within the exclusive competence of the Russian court.
Swiss law
In the regulatory acts of individual countries, legal relations related to the choice of the court to resolve a dispute that may arise in the future are regulated quite clearly. An example of this is Swiss law. In the regulatory act on international law of 1987, the issue of concluding derogation and proprogation agreements was regulated not only in detail, but also in a very original way.
The Law enshrines the possibility of participants in legal relations to agree on the jurisdiction of a possible or existing dispute related to property requirements. The parties may establish the exclusive competence of the court of their choice to hear the case.
However, the Swiss lawmaker also provided for the principle of integrity in relation to the actions of counterparties. Thus, the normative act establishes that a proprietary agreement will be declared invalid if one of the parties was maliciously deprived of the opportunity to challenge its actions in a Swiss court. Simply put, if a partner insisted on a change of jurisdiction in violation of the interests of another participant in the relationship, the agreement becomes null and void.
In addition, Swiss law provides for the possibility of a court selected by the parties to refuse to consider a dispute. This rule applies, of course, to foreign authorities. If the Swiss court acts as the chosen institution, the residence or stay, the Swiss citizenship of one of the parties to the dispute, and the need to apply national law to the subject of the application .
Regulation Nuances
It should be noted that the statutory law of some European countries pays special attention to issues related to the design of derogation and proprogation agreements. And this is no coincidence.
The fact is that in many legal relations the proper solution of the problem is essential in determining the "international competence", recognition and enforcement of the decision of the court abroad.
In India, for example, certain categories of foreigners cannot participate in the proceedings as plaintiffs without special permission.
The ratio of alternative and exclusive jurisdiction
This is another important aspect of the problem of applying proprietary agreements. The agreement between the parties to the legal relationship on the choice of the authority that will consider possible disputes does not change the exclusive jurisdiction enshrined in national law. It is, in particular, the consideration of claims related to ownership of land allotments and buildings located in the Russian Federation, the requirements for carriers whose governing body operates in Russia on a permanent basis, claims of the testator's creditors to the successors before they accept the inheritance, if the property or Most of it is located in the Russian Federation.
A similar rule applies to bankruptcy cases. Such disputes are considered, according to the APC of the Russian Federation, at the location of the debtor.
The consideration of other claims is allowed in the territory of another state. For example, we are talking about protecting the reputation of the organization. These cases may be considered at the location of the applicant. The same rule applies to consumer protection lawsuits.
International Documents
Provisions prohibiting changing the order of exclusive jurisdiction can be fixed not only by national legislation. They are reflected in a number of international documents. Examples are, in particular, the Minsk and Chisinau Conventions. So, the first contains 21 articles, according to which exclusive competence, based on the provisions of paragraph 3 of Article 20 and other norms provided for in Part II-V and relating to personal status, property relations, family affairs and the order of inheritance, as well as in national legislation, may not be changed by agreement of the parties.
The presence of an agreement to refer a dispute to a specific court of a particular state, if this does not violate the rules of exclusive jurisdiction, entails the impossibility of proceedings in a court of another country. Accordingly, the authorized body is entitled to terminate the proceedings at the request of the defendant.
Features of the arrangement
Who can conclude a proprietary agreement? Any entity with legal personality is entitled to become a party to the agreement. As mentioned above, the provisions on contractual jurisdiction are used by persons conducting foreign economic activity. It makes no sense to use the agreement in another area due to their purpose.
The form of the document is subject to the requirements stipulated by national legislation for foreign economic transactions. It must contain the details of the parties, the essential conditions, in the absence of which the agreement will be declared invalid.
Conclusion
Thus, the contractual jurisdiction implies the possibility of the parties to agree on the transfer of the dispute to a court of a foreign state. The relevant conditions are enshrined in an agreement called propogative or derogational.
Paperwork, however, is allowed if the transfer of the proceedings does not violate the exclusive jurisdiction of the national court.
You can conclude an agreement before accepting the claim for production. If the proceedings have already begun, at the request of the defendant, the court has the right to terminate consideration of the claim. In this case, the applicant must provide evidence of the presence of a proprietary agreement.