The Court of Second Instance of the Macao Special Administrative Region (TSI) has issued a decision on the appeal of a judgment regarding a dispute over the jurisdiction pact in an action for the specific execution of a promissory contract for the purchase and sale of real estate located in Macao . The core of the dispute resided in knowing whether or not the agreement reached by the parties to the contract to submit disputes arising from the contract to the appreciation of the Zhuhai People’s Court excluded the jurisdiction of the courts of Macau, as shown by the Judgment of the Court of Second Instance (Case No. 923/2021).
In general, whenever there is a contract that has a connection with more than one jurisdiction due to the different domiciles of the contracting parties or the different jurisdictions where the contract was signed, it is possible that the courts of more than one jurisdiction consider themselves competent for the assessment of disputes arising from the contract.
In these situations, the parties normally bring actions before the court that is most convenient for them, depending on their interests, and it is therefore common, particularly in cross-border trade, for the parties to previously agree on a jurisdiction agreement, through which they accept to submit, totally or partially , disputes arising in the contract to the courts of one or more specific jurisdictions.
This agreement is generally referred to as a jurisdiction pact, and may be attributable or exclusive of jurisdiction. The first means that the parties attribute jurisdiction to the courts of a specific jurisdiction to decide the case, while in the second, the parties attribute exclusive jurisdiction to the courts of a specific jurisdiction, thus excluding the jurisdiction of the other courts. Furthermore, this agreement is subject to a set of conditions to be valid.
In this sense, the agreement must cumulatively meet the following conditions: it concerns a dispute over available rights; be accepted by the law of the designated court; correspond to a serious interest of the parties or one of them, as long as it does not involve serious inconvenience to the other; not fall within the exclusive competence of the courts of Macau; result from a written agreement or confirmed in writing, which must expressly mention the competent jurisdiction.
The Macau courts, in turn, have exclusive competence to hear actions relating to real rights over real estate located in Macau and those intended to declare the bankruptcy or insolvency of legal persons whose head office is located in Macau.
Notwithstanding the case under analysis involving a contract referred to by the parties as a “contract for the purchase and sale of an autonomous fraction”, the parties had, in fact, entered into a promissory contract for the purchase and sale of an autonomous fraction, i.e. , the parties were obliged to conclude a definitive purchase and sale contract for the aforementioned property, the promissory contract not falling within the exclusive competence of the Macau courts, given its mandatory nature.
However, in accordance with article 16, paragraph b) of the Code of Civil Procedure, “the courts of Macau are competent to hear (…) actions relating to personal rights of enjoyment, eviction, preference and specific execution of promissory contract, when the object is real estate located in Macau”. In other words, the courts of Macau have non-exclusive jurisdiction over actions for the specific execution of a promissory contract involving real estate located in Macau.
Although the parties have agreed, with regard to determining the competent jurisdiction, that “disputes arising from the contract must be resolved by the contracting parties through negotiations, and if attempts at negotiation are frustrated, the contracting parties agree to submit the resolution of the disputes for consideration by the People’s Court of Zhuhai.”, the TSI understood that the agreement was of an attributive and not privative nature, with the parties only agreeing to submit the disputes to the People’s Court of Zhuhai for consideration of cause, but did not declare that the disputes could only be known by the Zhuhai People’s Court. Thus, the TSI considered that the jurisdiction of the courts of Macau had not been expressly excluded.
Thus, if the contracting parties wish to exclude the jurisdiction of the courts of Macau through a pact exclusive of jurisdiction, they must pay special attention to the wording and the meaning of the declaration of intent of the agreement, because, under the terms of the provisions of paragraph 2 of the article 29 of the Code of Civil Procedure and according to the understanding contained in the Judgment of the Court of Second Instance (Case No. exclusion of the jurisdiction of the courts in Macau, it must be presumed that the jurisdiction abroad is not exclusive but alternative to the jurisdiction of Macau”.
*Trainee lawyer,
Rato, Ling, Lei & Cortés (Lektou)
