Foreign forum selection clauses in commercial contracts are enforceable when parties validly choose exclusive jurisdiction and governing law.

An exclusive foreign jurisdiction clause in a commercial distributorship agreement was upheld where the parties expressly conferred jurisdiction on the Italian Court at Milan and chose Italian law to govern interpretation, validity, performance and termination. The court distinguished domestic jurisdiction rules under the Code of Civil Procedure from party autonomy in private international law, and held that a valid foreign forum clause is not contrary to public policy merely because the transaction has links with India. Circumstances relied on for retaining jurisdiction, including performance and evidence in India, were treated as foreseeable when the contract was made. The suit was not entertained and the plaint was returned for presentation before the appropriate court.

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Issues: Whether the court had jurisdiction to entertain and try the suit in view of the contractual clause conferring exclusive jurisdiction on the Italian Court in Milan and the governing-law clause stipulating Italian law.

Analysis: The distributorship agreement expressly provided that disputes, claims or controversies arising out of the agreement, including questions relating to validity, interpretation, performance and termination, would fall within the exclusive jurisdiction of the Italian Court at Milan. The agreement also stated that it would be governed by and construed in accordance with the laws of Italy. The court distinguished the cases dealing with jurisdiction of courts governed by the Code of Civil Procedure from cases where parties agree to submit disputes to a foreign or neutral forum. It held that, in the context of private international law and commercial contracts, parties may validly choose a foreign court of choice, and such a clause is not opposed to public policy merely because the transaction has links with India. The reasons advanced for retaining jurisdiction, including that the agreement was performed in India and that evidence and relief were situated in India, were treated as foreseeable circumstances already within the contemplation of the parties when they contracted.

Conclusion: The court declined to entertain the suit and returned the plaint for presentation before the appropriate court.

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