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CONTRACT LAW – ‘UK COURTS’ MEANS ENGLAND: COURT UPHOLDS JURISDICTION DESPITE VAGUE CLAUSE

1. Summary and Facts:

SMT Global Logistics Ltd v Georgian Airlines LLC [2025] Lloyd’s Rep. Plus 89, a Hong Kong air cargo company (“claimant”) entered into an agreement with Georgian Airlines (“defendant”) in September 2023 wherein they agreed to arrange and operate regular cargo flights, first from China to Budapest and later from Hong Kong to Madrid and Stansted. In December 2023, defendant terminated the agreement, which claimant treated as a breach of contract. The claimant then claimed the unpaid sums, including advance payments for flights that were not carried out and a deposit.

The claimants argued based on the exclusive jurisdiction clause which stated that any disputes would be decided by a court under United Kingdom. However, the defendant challenged and counter argued that the case should be heard in Georgia by relying on Article 33 of the Montreal Convention, which limits such claims can be brought in its place of business or the place where the contract was made.

2. Legal Issues:

  • Whether the dispute fell within the scope of the Montreal Convention, thereby triggering the exclusivity principle under Article 29 and Article 33 of the Convention.

3. Court’s Findings:

The Court concluded that England is the appropriate forum for trial and that the court ought to exercise its discretion to permit service out of jurisdiction. Based on the ground that: –

  • Court finds that the Montreal Convention did not apply where the claimant was not making a cargo claim. As SMT’s claim was not for destruction or loss or damage to cargo sustained “during carriage by air”, but for repayment of payments made including the defendant’s failure to carry out goods.
  • On this basis the court found that the claimant’s action fell outside Article 29 and consequently Article 33 did not govern the jurisdiction.
  • Therefore, the contractual clause was deemed as effective and the court proceeded to give SMT permission to serve out while holding that England was the appropriate forum.

4. Practical Implications:

This judgment plays a significant roles for commercial actors in the aviation and logistics sector. As it :-

  • Confirms that contractual jurisdiction clauses remain effective even when the Convention does not apply, allowing parties to manage litigation risk through drafting; and
  • Highlights the continuing relevance of procedural rules, such as those governing service and jurisidiction when a claim falls outside the Convention framework.

The decisions has ultimately reinforces a good principle of international air carriage law, where it allows the juridictional and liability rules to be apply only when it defined the substantive scope while leaving a room for ordinary contractual principles to be operated outside the scope.

If you need more information on our legal updates, our Knowledge and Law News Division at lawnews@yhalaw.com.my would be pleased to assist.

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©2026. YEW HUOI, HOW & ASSOCIATES. ALL RIGHTS RESERVED. The contents of this legal updates are intended for general information only and should not be construed as legal advice or legal opinion. If you need further advice or explanation on the subject, please contact our firm. Please do not reproduce, transmit or distribute the contents therein in any form, or by any means as Legal Profession (Publicity) Rules 2001 restrict such circulation.

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