Foreign litigants seek forum to litigate: is Florida open for business?

• Author: Pendleton, Garrett L.

A contract provision familiar to most lawyers is one that designates the forum for resolving disputes arising out of the contract. This type of provision often works in tandem with a provision that designates the law that will govern such disputes. These provisions are especially important in contracts involving parties located in different countries because of the inherent uncertainty in predicting which country's law will govern contract-related disputes and which country's courts can properly exercise jurisdiction over the parties to the dispute. (1)

By choosing the forum and governing law in the contract, the parties seek to minimize the uncertainty, delay, and expense associated with litigating over the proper forum and applicable law. (2) These provisions can also allow the parties to choose a forum completely unconnected to the contract or the parties, and the law of a jurisdiction that likewise has no connection to the contract or the parties. For example, the parties may prefer a forum that has no connection to the contract because it is considered mutually convenient and neutral. Similarly, the parties may find the law of a completely unrelated jurisdiction impartial or better developed for the subject matter of their contract.

As a crossroads for international commerce, Florida is a natural choice for foreign parties seeking a convenient and neutral forum for dispute resolution. Florida also offers a well-developed court system and body of commercial law that foreign parties can readily find sophisticated and impartial. To take advantage of these attributes of Florida's legal system, the International Law Section of The Florida Bar is supporting amendments to Florida statutes that, if enacted into law, will serve as an invitation to foreign companies to choose Florida as their forum and Florida law as the law to govern their disputes, even where the companies and their contract have no relationship at all with Florida. This article discusses these proposed amendments and some of the advantages they offer, along with a potential problem with extending such a wide invitation to litigate in Florida.

The Current Law

Florida law is currently not receptive to foreign companies choosing Florida courts and Florida law absent a reasonable connection between their transaction and the state. On the statutory level, F.S. [subsection] 685.101 and 685.102 expressly authorize certain parties to choose Florida courts and Florida law for resolution of their contract disputes. In doing so, however, these statutes lack any clear authorization for foreign companies whose transaction does not bear a relationship to Florida. Section 685.102 provides in pertinent part:

685.102 Jurisdiction.

Notwithstanding any law that limits the right of a person to maintain an action or proceeding, any person may, to the extent permitted under the United States Constitution, maintain in this state an action or proceeding against any person or other entity residing or located outside this state, if the action or proceeding arises out of or relates to any contract, agreement, or undertaking for which a choice of the law of this state, in whole or in part, has been made pursuant to s. 685.101 and which contains a provision by which such person or other entity residing or located outside this state agrees to submit to the jurisdiction of the courts of this state.

This section vests the courts with jurisdiction over foreign parties if in their contract they agree to submit to the jurisdiction of the Florida courts and if they choose Florida law pursuant to [section] 685.101.

However, [section] 685.101 creates significant doubt about the ability of foreign companies to effectively choose Florida law. It provides in pertinent part:

685.101 Choice of law.

(1) The parties to any contract, agreement, or undertaking, contingent or otherwise, in consideration of or relating to any obligation arising out of a transaction involving in the aggregate not less than $250,000, the equivalent thereof in any foreign currency, or services or tangible or intangible property, or both, of equivalent value, including a transaction otherwise covered by s. 671.105(1), (3) may, to the extent permitted under the United States Constitution, agree that the law of this state will govern such contract, agreement, or undertaking, the effect thereof and their rights and duties thereunder, in whole or in part, whether or not such contract, agreement, or undertaking bears any relation to this state.

(2) This section does not apply to any contract, agreement, or undertaking:

(a) Regarding any transaction which does not bear a substantial or reasonable relation to this state in which every party is either or a combination of:

1. A resident and citizen of the United States, but not of this state; or

2. Incorporated or organized under the laws...