Chapter 26-2 Resisting a Forum Selection Clause

• Jurisdiction: United States

26-2 Resisting a Forum Selection Clause

A forum selection clause will not be enforced if it is the product of fraud or if the party seeking enforcement has waived the clause.

26-2:1 Fraud

Fraud can invalidate a forum selection clause, but such a showing is difficult as it is the same standard as that applied to arbitration clauses, discussed in Chapter 25.²³ The clause itself must be the product of fraud, rather than the agreement as a whole or in general.²⁴ A general allegation of fraud directed at the entire agreement will not invalidate the clause.²⁵

A forum selection clause is invalidated where a party conceals a forum selection clause with the intent to defraud.²⁶ Failing to point out the clause standing alone, however, does not constitute fraud; and the fact that a party is unaware of the clause does not make it invalid.²⁷

26-2:2 Waiver

The standard for the waiver of a forum selection clause is the same as the standard for the waiver of an arbitration agreement. A party waives a "forum selection clause" by substantially invoking the litigation process and prejudicing the opposing party.²⁸ See Chapter 25-3:4 Waiver of Right to Arbitrate.

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Notes:

^[23] See Chapter 25, Section 3:3, discussing fraud as a defense to an arbitration clause.

^[24] In re Lyon Fin. Servs., Inc., 257 S.W.3d 228, 232 (Tex. 2008) (orig. proceeding); see also In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 134 (Tex. 2004) (orig. proceeding).

^[25] In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 134 (Tex. 2004).

^[26] In re International Profit Assocs., Inc., 286 S.W.3d 921, 923 (Tex. 2009) ("Evidence that a party concealed a forum-selection clause combined with evidence proving that concealment was part of an intent to defraud a party may be sufficient to invalidate the clause . . .").

^[27] In re International Profit Assocs., Inc., 286 S.W.3d 921 (Tex. 2009).

^[28] In re Nationwide Ins. Co. of Am., 494 S.W.3d 708, 712-13 (Tex. 2016) ("[W]e have borrowed a different standard from the jurisprudence applicable to arbitration clauses, an analogous type of forum-selection clause.").