in Ohio).
If the parties intend for a forum
selection clause to mean an action
may be brought in any state or federal
court within the specified state, they
may be surprised to find that they have
unknowingly limited themselves to state
court by using the word "of." Conversely,
if the parties intend to allow only state
court actions, but use the words "courts
in Utah," they may open themselves
up to federal courts as well. In order to
ensure there is some certainty, parties
must use the correct language to specify
the court or courts they want to have
jurisdiction.
a jurisdictional provision is mandatory,
rather than permissive. A mandatory
forum selection clause "contains clear
language showing that jurisdiction
is appropriate only in the designated
forum." Am. Soda, LLP, 428 F.3d at
926 (citation omitted). "In contrast,
permissive forum selection clauses
authorize jurisdiction in a designated
forum, but do not prohibit litigation
elsewhere." Id. at 926-27.
Hence, it is not enough to just set
forth the desired forum. In order to
create any sort of certainty, specification
of forum must also be accompanied by
"mandatory or obligatory language."
Id. at 927. Words like "shall" should
be used. If there is no express language
setting forth a forum selection clause as
pair the forum selection with additional
language indicating the parties' intent
to make the venue exclusive. Id. This
can be done using words such as
"exclusive forum." Id. Such language
can help ensure a provision meets the
foundational requirement that "a waiver
of one's statutory right to remove a case
from state to a federal court must be
clear and unequivocal." Id. (internal
quotation marks and citation omitted).
Overall, such provisions do not need
to be long or complex to be effective.
The following provides an example
incorporating the information touched
upon in this article: "The Third District
Court in and for Salt Lake County, State
of Utah, shall have exclusive jurisdiction
over the subject matter of this
Agreement, any dispute or controversy
arising out of this Agreement, and the
parties hereto."
whose law is to apply are generally
enforceable. See, e.g., Robinson v. Ladd
Furniture, Inc., 995 F.2d 1064 (4th Cir.
1993) ("North Carolina courts generally
enforce choice of law provisions");
Resolution Trust Corp. v. Northpark
Joint Venture, 958 F.2d 1313, 1318
(5th Cir. 1992) ("Under the Texas
rules [where] parties have agreed to an
enforceable choice of law clause, the law
of the chosen state must be applied.").
However, as with jurisdiction and venue,
provisions governing whose law applies
are also subject to minimum contacts
requirements. A party must have
See, e.g., Burger King Corp. v. Rudzewicz,
471 U.S. 462, 474 (1985) (discussing the
"constitutional touchstone" of minimum
contacts).
Also, courts at times disregard choice
of law language due to conflict of laws
and public policy doctrines. See, e.g.,
Wissot v. Great-W. Life & Annuity Ins.
Co., 619 F. App'x 603, 604 (9th Cir.
2015) ("we enforce the contract's choice-
of-law provision unless the chosen state
has no substantial relationship to the
parties or the transaction and there is no
other reasonable basis for the parties[']
choice, or the application of the law of
the chosen state would be contrary to a
fundamental policy of a state which has
a materially greater interest than the
chosen state in the determination of the
particular issue.") (internal quotation
marks and citation omitted). A phrase
such as "the law of the State of Utah
shall apply without regard to conflict
of laws principles" can help bolster an
argument that the parties should be
bound by the language as agreed upon in
the contract.
the terms "in" versus "of," choosing
mandatory words rather than permissive,
and adding additional choice of
law protection can go a long way in
decreasing the unknowns of tomorrow
when entering into a contract today.