Conflicting jurisdictions!

I normally try not to provide case updates or legal updates that are too technical in nature, but was fascinated by this case that I came across this week.

Harman v Opus Recruitment Solutions - Australia Pty Ltd (Stay Application) [2024] FCA 1356

In November 2021, Mr Harman (the applicant) entered into an Employment Contract with the first respondent, Opus Recruitment Solutions – Australia Pty Ltd, as well as a Shareholders’ Agreement with the seventh respondent, Hexagon Topco Ltd (and its subsidiary undertakings), of which Hexagon Topco had ultimately control over Opus Australia. Both the Employment Contract and Shareholders’ Agreement contain post-employment non-solicitation and non-competition restraints. Mr Harman’s employment was terminated in February 2024, and he commenced proceedings in the Federal Court of Australia with respect to matters consequent upon that termination, including what payments he is entitled to upon termination, and whether and the extent to which he can be restrained by the two restraint clauses in the two agreements.

This judgment concerns a stay application brought by Hexagon Topco, together with the sixth respondent (who supported the application), Graphite Capital Co-Investment IX LP. They claimed that the Court ought exercise its discretion to stay the proceedings against them on the basis that the Shareholders’ Agreement contains an exclusive jurisdiction clause, which states that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute which may arise out of, or in connection with, this Agreement. By contrast, the Employment Contract contains an exclusive jurisdiction clause that any dispute arising out of or in connection with the agreement will be the subject of the courts of New South Wales.

Therefore, the issue to be determined was whether the Court should exercise its discretion and stay the proceedings as against Graphite Capital and Hexagon Topco. The effect of staying the proceedings would mean that Mr Harman has to bring proceedings in both Australia and the United Kingdom. Courts will ordinarily adhere to the agreement of the parties as to the choice of forum to ventilate their dispute, unless there are strong countervailing reasons to depart from their agreement.

For the reasons set out in the decision, the Court found that Mr Harman established that there are strong countervailing reasons why the proceedings ought not be stayed as against Graphite Capital and Hexagon Topco. It is an interesting example of the need to be aware of potentially conflicting jurisdictional clauses, as well as outlining the approach the courts may take to such conflicts.