Venue, Jurisdiction and Forum
Selection Provisions
on what happens in instances of
disagreement. One of the first questions
presented is where and how the parties
can deal with a dispute and whose laws
apply. Thus, written contracts should
contain clauses pertaining to venue,
jurisdiction and choice of law.
Boilerplate provisions on these
subjects are recycled and passed on
for generations. When drafting, it can
be easy to forget that every word really
counts. Ditching the copy-and-paste
outline some of the traps presented,
set forth how courts have interpreted
various clauses and discuss practical
considerations for drafting.
clauses are presumed valid. See, e.g.,
Atlantic Marine Construction Co., Inc. v.
U.S. District Court for the Western District
of Texas, 134 S. Ct. 568 (2013). Carefully
pruning and nourishing such provisions
each time they are planted into a new
contract can help head off issues. Three
prominent issues to be aware of are the
sovereignty vs. geography distinction,
mandatory vs. permissive language and
potential inroads regarding choice of
law protection.
statements of jurisdiction. For example, a
contract could state that the parties may
bring an action "in the courts of Utah."
However, this may not have the intended
result. Many judicial interpretations
are finding that a single two-letter word
("in" or "of") may wholly change the
meaning of jurisdictional provisions.
In Doe 1 v. AOL, LLC, 552 F.3d 1077
(9th Cir. 2009), the parties disputed
the meaning of a forum selection clause
stating exclusive jurisdiction resides
with "the courts of Virginia." One party
claimed the phrase included state and
federal courts in Virginia, while the other
argued it conferred exclusive jurisdiction
only to state courts. Id. at 1081. The
court looked to the plain meaning of
the word "of" as "indicating origin,
source, descent, and the like." Id. at
1082 (citation omitted). Thus, the court
concluded the word "of" designated only
state courts as proper. Id. This creates a
sovereignty versus geography distinction,
where the word "of" is construed to refer
to the sovereignty, while the word "in"
refers to the geographical location of the
courts. Accordingly, the court interpreted
the word "of" to include only state courts
of Virginia.
Doe 1 also discussed several other
cases in line with this distinction. For
instance, the court in Am. Soda, LLP
v. U.S. Filter Wastewater Group, Inc.,
428 F.3d 921, 926 (10th Cir. 2005),
concluded that "Courts of the State
of Colorado" referred to sovereignty
and not geography, allowing only state
courts. Dixon v. TSE Int'l Inc., 330 F.3d
396, 398 (5th Cir. 2003), concluded
likewise and held that "[f]ederal district
courts may be in Texas, but they are
not of Texas" and thus "Courts of
Texas, U.S.A." meant the state courts.
Finally, "the law, and in the courts, of
the Commonwealth of Massachusetts"
was interpreted to restrict "law" and
"courts" to the state in LFC Lessors, Inc.
v. Pac. Sewer Maint. Corp., 739 F.2d
4, 7 (1st Cir. 1984) (emphasis added).
Conversely, courts have found "in" to
mean both state and federal courts. See,
e.g., Basicomputer Corp. v. Scott, 973
F.2d 507, 510 (6th Cir .1992) (holding a
provision discussing courts "in the State
of Ohio" did not exclude the federal
& Counsel, PC, where his practice focuses on
business, commercial and real estate litigation,
transactions and mediation. He has served for
many years on the Primerus Board of Directors.
practices commercial litigation, commercial real
estate, intellectual property, trademarks, contracts
and general litigation.
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