"I write the songs" but the courts decide jurisdiction: Lessons from Hipgnosis v Manilow

Introduction

The English Court of Appeal's decision in Hipgnosis SFH 1 Limited v Barry Manilow & Anr [2025] EWCA Civ 486 provides important clarification on the operation of asymmetric jurisdiction clauses and firmly rejects the concept of "floating jurisdiction".

Background to the dispute

The case concerned a Music Catalogue Agreement dated 20 March 2020 between Hipgnosis (the appellant) and Barry Manilow and his entertainment company (the respondents). Under this agreement, Manilow would pay certain royalties to Hipgnosis in exchange for an initial purchase price, with an additional purchase price payable in certain circumstances.

The agreement contained a jurisdiction clause with four key sentences, the second and fourth being particularly important:

• The second sentence provided: "Each party irrevocably submits for all purposes of this Agreement (including any such dispute or claim) to the exclusive jurisdiction of the English courts".
• The fourth sentence stated: "Notwithstanding the foregoing, any claims made by [Mr Manilow] against Hipgnosis related to the Purchase Price may be brought by [Mr Manilow] in the courts of Los Angeles, California or New York City, New York and solely in connection with such claims, Hipgnosis hereby agrees to submit to the jurisdiction of the courts located in Los Angeles, California and New York City, New York".

The dispute arose when Manilow allegedly failed to pay royalties due to Hipgnosis. Manilow contended that additional purchase price was owed to him, which justified his retention of the royalties.

Procedural history

On 12 August 2024, Hipgnosis initiated proceedings in England seeking declarations relating to the Sony Receipts (royalties) and the additional purchase price. Sixteen days later, on 28 August 2024, Manilow issued proceedings in Los Angeles concerning the additional purchase price and making wider claims of fraudulent or negligent misrepresentation.

Manilow applied to the English High Court for an order stating that it had no jurisdiction to hear the purchase price claims. The High Court initially granted a stay of the purchase price claims. Mr. Justice Marcus Smith found that although the English proceedings had been properly commenced, once Manilow exercised his option to litigate in Los Angeles, the "floating jurisdiction" crystallised in favour of Los Angeles, effectively revoking the English court's jurisdiction over those claims.

The Court of Appeal's decision

The Court of Appeal ("CA") unanimously allowed Hipgnosis's appeal and lifted the stay. Sir Julian Flaux, giving the lead judgment (with which Phillips LJ and Snowden LJ agreed), delivered a rejection of the "floating jurisdiction" concept.

Key findings

1. Jurisdiction is determined at commencement
   
   The CA reaffirmed the fundamental principle that the jurisdiction of the English courts is determined at the date when proceedings are issued. The concept that jurisdiction could be "floating" and later lost was described as "heretical and contrary to authority".
    
2. Proper construction of the jurisdiction clause
   
   The CA held that the jurisdiction clause was asymmetric in nature. The second sentence conferred exclusive jurisdiction on the English courts for all claims, with the fourth sentence providing a limited carve-out giving Manilow the option to pursue purchase price claims in Los Angeles or New York.
   
   Crucially, the CA found that the words "Notwithstanding the foregoing" at the beginning of the fourth sentence simply provided a limited qualification to Manilow's otherwise exclusive submission to English jurisdiction. These words could not be construed as revoking his irrevocable submission to the English courts or extinguishing the jurisdiction which the English courts already had over all of Hipgnosis's claims.
    
3. One-sided nature of the option
   
   The CA emphasised that the fourth sentence only related to purchase price claims brought by Manilow. It did not address claims brought by Hipgnosis relating to the purchase price, which remained subject to the exclusive jurisdiction of the English courts under the second sentence.
    
4. Possibility of parallel proceedings
   
   The CA acknowledged that parallel proceedings might result from this construction, but noted that this possibility is inherent in asymmetric jurisdiction clauses. Moreover, the parallel proceedings existed only because Manilow chose to exercise his option to litigate in California when he did not have to do so.
    
5. Discretionary stay
   
   The CA also considered whether it should exercise its discretion to grant a stay even if jurisdiction existed. It concluded there was no basis for a stay: the agreement was governed by English law, contained an exclusive jurisdiction provision covering all claims, and the English High Court was the one court where all issues could be determined in a single jurisdiction. The CA noted that the risk of inconsistent judgments was "somewhat exaggerated", as the ordinary rules of issue estoppel would apply to mitigate such risks.

Comparison with LMA wording

The CA considered the Loan Market Association's standard asymmetric jurisdiction clause, which is commonly used in finance transactions. While acknowledging differences between the LMA wording and the clause in this case, the CA found that these differences did not undermine its conclusion that the clause contemplated the possibility of parallel proceedings.

Practical implications

This decision yields a number of important implications for practitioners:

1. Jurisdiction is fixed at commencement
   
   The CA has rejected the concept of "floating jurisdiction". Once proceedings are properly commenced in accordance with a jurisdiction clause, that jurisdiction cannot be retrospectively lost through the subsequent exercise of an option by another party. This provides welcome certainty for parties initiating proceedings.
    
2. Precision in drafting asymmetric clauses
   
   When drafting asymmetric jurisdiction clauses, practitioners should: 
   • Clearly define which party benefits from any option and for which claims. 
   • Consider including mechanisms to avoid parallel proceedings, such as provisions requiring discontinuation of existing proceedings or time limits for exercising options. 
   • Explicitly state whether alternate jurisdiction is exclusive for those claims.
3. Risk of parallel proceedings is inherent
   
   Unless explicitly prevented by the wording of the clause, asymmetric jurisdiction provisions inherently create the possibility of parallel proceedings. While courts generally presume that parties do not intend disputes to be litigated in multiple forums (the Fiona Trust "one-stop shop" principle), this presumption gives way to the proper construction of the clause. Where the commercial context suggests parties intended flexibility in forum selection for certain claims, courts will give effect to that intention even if it results in concurrent proceedings.

The judgment therefore serves as a reminder that jurisdiction clauses, particularly asymmetric ones, should be drafted with precision and with careful consideration of the procedural consequences that may follow.