Chapter 26-1 Enforcing a Forum Selection Clause

• Jurisdiction: United States

26-1 Enforcing a Forum Selection Clause

This section discusses enforcing forum selection clauses.

26-1:1 Enforceability of Forum Selection Clauses Generally

Forum selection clauses are presumptively valid, and are routinely enforced in Texas courts.¹ The Supreme Court of Texas has consistently held that mandamus will lie to correct a trial court's refusal to enforce a forum selection clause.²

A trial court may not refuse to enforce a forum selection clause unless the party opposing its enforcement demonstrates "(1) enforcement would be unreasonable or unjust, (2) the clause is invalid for reasons of fraud or overreaching, (3) enforcement would contravene a strong public policy of the forum where the suit was brought, or (4) the selected forum would be seriously inconvenient for trial."³

A party seeking to resist a forum selection clause bears a "heavy burden of proof" and must show that trial in the chosen forum is so "gravely difficult and inconvenient" that he will be deprived of his day in court.⁴

Enforcement may be unreasonable or unjust when the forum selected is a "remote alien forum,"⁵ though the Supreme Court of Texas has never seen a "remote alien forum,"⁶ or where the clause is the product of fraud.

Whether or not the selection clause applies to the particular claims asserted depends upon whether or not the substance of the claims arises from the contract containing the clause.⁷ Tort claims between the contracting parties such as fraud and negligent misrepresentation,⁸ tortious interference,⁹ and breach of fiduciary duty and securities claims related to the contract with the clause¹⁰ have all been held to be subject to the selection clause.

26-1:2 Distinguishing Forum Selection Clauses from Venue Selection Clauses

In the case of In re Great Lakes Dredge & Dock Co. L.L.C., the Corpus Christi Court of Appeals held that the Texas Supreme Court's recent decisions regarding the enforcement of forum selection clauses did not "supplant firmly established Texas law regarding the enforcement of venue-selection agreements that contravene a mandatory venue statute."¹¹

The court recognized that although Texas case law has sometimes muddled the distinction, "forum" and "venue" each have a distinct legal meaning. "Forum" generally refers to a sovereign or a state. Conversely, "[a]t common law, venue meant the neighborhood, place, or county in which the injury is declared to have been done or in fact declared to have happened." In Texas, the court noted, "venue" refers to the county in which suit is proper within the forum state. Therefore, a "forum" selection agreement is one that chooses another state or sovereign as the location for trial, whereas a "venue" selection agreement chooses a particular county or court within that state or sovereign.¹²

The court then analyzed "nearly a hundred years of Texas case law"¹³ establishing that Texas courts will not enforce venue selection agreements that contradict mandatory venue statutes, as a matter of strong, established public policy.¹⁴ As a result, in Texas the fixing of venue by contract, except in instances specifically permitted by statute...