Jurisdiction in the contract: one word too many, one word too few

Jurisdiction clauses are treated as a routine component in many contracts. A sentence, taken once from an old model, briefly adapted, done. The case decided by the Court of Appeal at the beginning of 2026 shows very vividly why precisely this convenience can be expensive: Not because jurisdictions are “complicated” – but because vagueness in the contract text opens the door for courts to interpret the contract in an interest- and enforcement-oriented manner.

The decision: “The place of jurisdiction is Vaduz” – but German courts still have jurisdiction

On January 8, 2026, the Berlin Court of Appeal (2nd Civil Senate) issued a ruling on international jurisdiction and the interpretation of a jurisdiction agreement under case number 2 U 20/25.

The starting point was a clause that was worded as follows: “The place of jurisdiction is the District Court of Vaduz.” The dispute arose as to whether this wording constituted an exclusive place of jurisdiction (in which case German courts would generally be “out”) or whether Vaduz was only meant as an additional place of jurisdiction (in which case legal action could also be brought at the court otherwise responsible).

The Court of Appeal did not interpret the clause as exclusive. The published brief description expressly emphasizes that the wording does not necessarily indicate exclusivity – for example with the passage: “…the wording … does not indicate exclusivity either.”

This is the first important point for contract drafting: “The place of jurisdiction is …” is not the same as “The exclusive place of jurisdiction is …”. If you want exclusivity, you have to formulate exclusivity clearly.

Interpretation according to §§ 133, 157 BGB: Not “quibbling over words”, but objective meaning

In legal terms, the dispute is based on the classic interpretation of contracts: The decisive factor is how a declaration is to be understood in good faith and with regard to common usage (Sections 133, 157 BGB). The wording is the starting point, but not the end point. Particularly in the case of jurisdiction agreements, the provision does not exist in a vacuum, but has an effect on a procedural reality: Jurisdiction is only of practical value if a title can be used at the end.

This is precisely where the decision becomes interesting, because it reveals a typical interpretation pattern that is often underestimated in practice: If a clause “somehow” fits linguistically, but leads to a dead end economically or procedurally in the case of strict exclusivity, the probability increases that courts will not read the clause as exclusive.

This is not a “trick”, but a consistent application of the rules of interpretation: An interpretation that renders the contract non-functional in key points is generally out of the question for “honest and reasonable” contractual partners.

The enforceability argument: why the contract must not end in a practical impasse

The decisive (and instructive for practice) line of reasoning is enforceability. The background is well known, but is often overlooked in everyday contractual practice: There is typically no uncomplicated recognition and enforcement bridge for state judgments between Germany and Liechtenstein as there is within the EU. In the German debate, it has been pointed out for years that judgments from the Principality of Liechtenstein are generally not recognizable due to a lack of guaranteed reciprocity (Section 328 (1) no. 5 ZPO).

The economic and procedural consequences are therefore obvious: an exclusive place of jurisdiction at a court in Liechtenstein can – depending on the place of enforcement and the financial situation – mean that a judgment exists in the end, but cannot be enforced in Liechtenstein in any meaningful way. In terms of interpretation, this can serve as a strong indication against a “truly intended” exclusivity. It is precisely this indication that plays a central role in the context of the decision.

At the same time, there is the systemic context: the Lugano Convention 2007 forms a recognition and enforcement bridge between the EU and certain EFTA states (including Switzerland, Norway and Iceland). The fact that Vaduz District Court is located in a state that is not a contracting state to this instrument is explicitly described in the literature as an enforcement problem.

The practical message is that jurisdiction is not just a “forum shopping” issue, but part of the enforcement chain. A contract that names a nice place of jurisdiction but ultimately does not make the title efficiently enforceable in the target state is not a “strong contract”, but a risk.

Contract templates and wording discipline: Why a single word turns the process strategy around

This is precisely where it becomes clear why clean wording is not a question of style. The difference between

“Place of jurisdiction is Vaduz”
and
“The exclusive place of jurisdiction is Vaduz, to the exclusion of all other places of jurisdiction”

is not academic. It determines whether a party can defend itself at the beginning of the dispute with a plea of jurisdiction, whether proceedings are delayed, whether costs are wasted on preliminary issues – and whether a title can be used at all in the end.

Many sample contracts stop in the middle: They want to sound “definite”, but avoid the clear trigger words that really define what is meant in legal terms. This produces precisely the zone in which courts then have to interpret. And when courts interpret, decisions are often based on plausibility, interests and practical effectiveness – especially in the case of clauses that structure access to state jurisdiction.

The Berlin case is so instructive because it reveals a pattern that is particularly common in IT, SaaS and media contracts: international parties, cross-border services, assets in Germany, but “imported” jurisdiction texts that originate from a completely different context (financial/asset management, older standard terms, international holding structures). When a dispute arises, a one-liner becomes a strategic breaking point.

Consequences for IT and SaaS contracts: Think jurisdiction, enforcement, dispute resolution as a package

For contracts in the tech environment – especially for SaaS, agency setups, international freelancers, platform and license models – the decision is a good opportunity to review standard assumptions:

Anyone agreeing a foreign exclusive place of jurisdiction should not only ask “does that sound international?”, but also “where are the assets located, where is enforcement to take place, how will the title be enforced there?”. If the answer is “in case of doubt in Germany”, a clause that forces the parties into a forum whose judgment can only be enforced in Germany with considerable friction or not at all is risky.

Where international neutrality is desired, dispute resolution can be solved structurally differently, for example via arbitration proceedings (with better international “transportability” of arbitral awards, keyword New York Convention) – but then with the consequence that the entire dispute resolution design must be built cleanly (place of arbitration, institution/rules, language, interim relief, costs). In any case, the fact that the New York Convention has been implemented in Liechtenstein’s national law shows that the arbitration track is normatively anchored there.(laws.li)

The real value lies in the methodology: jurisdiction clauses do not belong at the end of the negotiation (“it doesn’t matter, the main thing is in”), but in the risk architecture. Particularly in IT contracts, where disputes often relate to quick measures (injunction, blocking, surrender, interim injunction), a fuzzy or practically unsuitable jurisdiction clause is a real business impact.

Conclusion: Contracts are not a decoration – they are litigation avoidance

The decision of the Court of Appeal is summarized in one sentence: A jurisdiction clause that is not clearly exclusive in terms of language and that would practically lead to an enforcement impasse in case of strict exclusivity is rather not interpreted as exclusive.

This is not an invitation to write imprecisely – on the contrary. It is an indication of what happens if a contract remains imprecise at a point where precision is cheap and dispute is expensive. Model contracts in particular should therefore not be treated as “tried and tested texts”, but as tools that need to be regularly tested against the business model, party structure and enforcement chain.

If a follow-up article is to be useful, the next step would be a short, practical clause logic (exclusive / non-exclusive / arbitration) with typical SaaS scenarios (B2B, international customer, holding structure, freelancer setup) – with wording that makes exclusivity really clear instead of just suggesting it.

Author: Marian Härtel

Marian Härtel ist Rechtsanwalt und Fachanwalt für IT-Recht mit einer über 25-jährigen Erfahrung als Unternehmer und Berater in den Bereichen Games, E-Sport, Blockchain, SaaS und Künstliche Intelligenz. Seine Beratungsschwerpunkte umfassen neben dem IT-Recht insbesondere das Urheberrecht, Medienrecht sowie Wettbewerbsrecht. Er betreut schwerpunktmäßig Start-ups, Agenturen und Influencer, die er in strategischen Fragen, komplexen Vertragsangelegenheiten sowie bei Investitionsprojekten begleitet. Dabei zeichnet sich seine Beratung durch einen interdisziplinären Ansatz aus, der juristische Expertise und langjährige unternehmerische Erfahrung miteinander verbindet. Ziel seiner Tätigkeit ist stets, Mandanten praxisorientierte Lösungen anzubieten und rechtlich fundierte Unterstützung bei der Umsetzung innovativer Geschäftsmodelle zu gewährleisten.