When entering into international contracts, parties often agree in advance which courts should resolve any disputes that may arise. While this approach offers predictability and legal certainty, it can also severely limit a party’s options. While it is a common approach to avoid foreign jurisdictions, one might learn that a decision from one’s “home” courts is not recognised abroad, so the only real option to recover any money would go to the foreign court (or conclude an arbitration clause in advance, which is a different topic).
This issue was at the heart of a recent legal dispute between Arrow Central Europe GmbH, a German company based in Neu-Isenburg, and LLC “Zavod Etalon”, a Russian company located in Tver. The case provides a clear example of how an exclusive jurisdiction clause can block access to local courts—even in complex geopolitical conditions.
Case Summary: Arrow Central Europe GmbH v. Zavod Etalon
Background
Arrow Central filed a lawsuit in the Arbitration Court of the Tver Region on 26 December 2024 (case no. А66-19469/2024), seeking payment of €268,020.86 from Zavod Etalon for goods delivered under a contract dated 29 April 2015. The contract included a forum selection clause, stating that disputes would be resolved exclusively by the courts of Offenbach am Main, Germany, and that German law would apply. The CISG was explicitly excluded.
First Instance Decision
The Tver court refused to accept the claim, citing Article 129(1)(1) of the Russian Arbitration Procedural Code (APC RF). It held that the case was outside the court’s jurisdiction due to the clearly stated forum clause. The judge emphasized that no evidence was presented to suggest the clause was invalid or unenforceable. The clause was deemed precise, enforceable, and binding.
Appellate Review
Arrow appealed, arguing that the enforceability of the clause should be assessed only after the defendant raised it as a defense. They also pointed out the impracticality of enforcing a German judgment in Russia, due to international sanctions and political complications. (See here the report about a most recent attempt to enforce a German decision in Russia). On 26 March 2025, the Fourteenth Arbitrazh Appellate Court upheld the lower court’s decision. It confirmed that the clause was valid and that the matter did not fall within the exclusive jurisdiction of Russian courts under Articles 247–249 APC RF. The court emphasized that the freedom of contract principle obliges parties to abide by the dispute resolution terms they agreed upon.
Legal Context and Implications
This decision aligns with the legal principle requiring strong respect for party autonomy in contract drafting. The courts reinforced that unless a forum clause is proven unenforceable, void, or practically impossible to comply with, it must be honored. Importantly, the appellate court dismissed the argument that changing political conditions could invalidate such a clause post hoc.
Similar principles apply in German court practice. German courts will enforce exclusive jurisdiction agreements unless doing so would violate essential public policy (ordre public) or where enforcement would be impossible due to an actual, not hypothetical, barrier. The mere fact that a court decision cannot be enforced in the country where the other party is seated would – most likely also not be sufficient to set aside an exclusive jurisdiction clause.
Conclusion
Parties should be extremely cautious when agreeing to exclusive jurisdiction clauses when enforcement in the country of the contractual partner is not guaranteed. These clauses can prevent access to other national courts, even when enforcement difficulties or political developments arise after contract execution.
In the German-Russian context, one should note that reciprocity never existed and even when the contract was concluded in 2015, there was no established practice that would have allowed to enforce a German judgement in Russia, so agreeing on an exclusive jurisdiction clause would only make sense if the partner had assets in a country where a judgement can be enforced.