What Law Governs Forum Selection Clauses

• Author: Symeon C. Symeonides
• Position: Alex L. Parks Distinguished Chair in Law and Dean Emeritus, Willamette University; LL.B. (Priv. L), LL.B. (Pub. L.), LL.M., S.J.D., LL.D. (h.c.mult.), Ph.D. (h.c.).
• Pages: 1119-1161

What Law Governs Forum Selection Clauses*

Symeon C. Symeonides*

TABLE OF CONTENTS

Introduction ................................................................................ 1120

I. Scenario 1: Actions Filed in the Chosen Court .......................... 1122

II. Actions Filed in a Court Not Chosen—The

“Seized” Forum .......................................................................... 1126

A. Scenario 2: Contracts Without a Choice-of-Law Clause ..... 1126

B. Scenario 3: Contracts with a Choice-of-Law Clause ........... 1135

1. Cases Applying Forum Law........................................... 1136

2. Cases Applying the Chosen Law .................................. 1139

3. Cases Distinguishing Between Enforceability and

Interpretation ................................................................. 1146

III. Summary, Critique, and Conclusions ......................................... 1150

A. Summary of Judicial Practice .............................................. 1151

B. Separating Enforceability from Interpretation ..................... 1152

C. Law Governing Enforceability ............................................. 1152

D. Defending the Choice of the Lex F ori in Some Cases ......... 1154

Conclusion .................................................................................. 1160

Copyright 2018, by SYMEON C. SYMEONIDES.

* This Article is ded icated to the memory of Professor Athanasios N.

Yiannopoulos, an ingenious law reformer and exemplary scholar of civil and

comparative law. Its subject, conflicts law, was the first of Thanasi’s many loves

and the focus of his first doctoral degree, under the mentorship of the great Albert

Ehrenzweig of U.C. Berkeley. When told that for an i mmigrant, one doctoral

degree was not enough for a teaching career, Thanasi obliged by obtaining a

second one from Cologne University under another giant of conflicts law, Gerhard

Kegel. Since then, working twice as hard as his peers became Thanasi’s modus

operan di. His unsurpassed record of scholarly accomplishments is the product of

that work ethic and his legacy to Louisiana, his adopted homeland.

* Alex L. Parks Distinguished Chair in Law and Dean Emeritus,

Willamette U niversity; LL.B. (Priv. L), LL.B. (Pub. L.), LL.M., S.J.D., LL.D.

(h.c.mult.), Ph.D. (h.c.).

1120 LOUISIANA LAW REVIEW [Vol. 78

INTRODUCTION

A forum selection (“FS”), choice-of-forum, or choice-of-court clause

is an agreement by which the parties submit a dispute to the jurisdiction of

a designated court (the “chosen” court). Before one can properly speak of

such an “agreement,” however, one must first verify that it came into

existence and determine whether it is valid and enforceable. In turn, this

determination may require answering several questions, such as whether

there was a meeting of the minds, whether the parties’ consent was free of

vices, and generally whether the agreement suffers from any defects like

unconscionability or violation of public policy. These questions are

hereinafter referred to as questions of “validity” or “enforceability” of the

FS clause.1

If the FS clause is enforceable, the court may have to answer other

questions regarding the meaning, scope, and effect of the clause. Examples

of such questions are whether the clause encompasses pre-contract or non-

contractual—in addition to contractual—claims, whether it binds non-

signatories or other third parties, and whether it confers exclusive or

nonexclusive jurisdiction to the chosen court—sometimes referred to as

“mandatory” or “permissive” clauses, respectively. For example, in

certain countries, a FS clause is presumed to be exclusive unless it

provides otherwise, but no such presumption exists in the United States.2

1. This Article uses the terms “validity” and “enforceability” as synonyms.

Some authors distinguish between the two. See William J. Woodward, Jr.,

Constraining Opt-Outs: Shielding Loca l La w and Those It Protects from Adhesive

Choice of Law Clauses, 40 LOY. L.A. L. REV. 9, 16–21 (2006); Jason Webb Yackee,

Choice of Law Considerations in the Validity & Enforcement of Interna tional

Forum Selection Agreements: Whose Law Applies?, 9 UCLA J. INT’L L. & FOREIGN

AFF. 43, 47–62 (2004). Although this distinction is valid, it is unnecessary for the

purposes of this Article.

2. T his circumstance exists, for example, under the Brussels I Regulation,

which is in force in 27 countries o f the European Union (“EU”), the parallel

Lugano Con vention, and the Hague Choice of Court Convention of 2005. See

Regulation of the European Parliament and of the Council of 12 December 2012

on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and

Commercial Matters 2012, No. 1215/2012, art. 25(1) (Eng.) [hereinafter Brussels

I]; Convention on Jurisdiction and the Recognition and Enforcement of

Judgments in Civil and Commercial Matters of 30/1 0/2007, art. 23 [hereinafter

Lugano Convention]; Hague Convention on Choice of Court Agreeme nts of 30

June 2005, art. 3( b) [hereinafter Hague Convention]. This convention is in force

in the EU, Mexico, and Singapore. The United States has signed but not ratified

it. See 37: Convention of 30 J une 2005 on Choice of Court Agr eements, HCCH,

2018] WHAT LAW GOVERNS FORUM SELECTION CLAUSES 1121

This Article refers to these questions as questions of inter pretation of the

FS clause.3

Some of these questions are legal, and others are factual; but in either

case, and as long as the case has contacts with more than one state—that

is, a “multistate” case—the court must address the logically antecedent

question—under which state’s laws should one answer these questions?

This is the choice-of-law question. This inquiry is necessary because, even

with regard to factual questions, the laws of the involved states may differ,

for example, on what inferences to draw from facts, who should bear the

burden of proof, or how to ascertain the parties’ intent.

Under which law should a court determine the enforceability of a FS

clause and which law should the court use in interpreting the clause?

Should the answer to either question differ depending on whether the court

is the one chosen in the FS clause or one not so chosen (the “seized”

court)? If a party files the action in the chosen court, should the court

directly apply the “internal” law of the forum state—that is, lex fori,

namely its substantive and procedural law exclusive of its conflicts law—

or should the court employ a choice-of-law analysis? If the latter, should

that analysis lead to applying the law that governs the underlying

contract—lex contractus4—which may or may not be the law of the forum

state? If a party files the action in another court, should the court apply the

lex fori, the lex contractus, or the law of the state chosen in the FS clause?

This Article discusses these questions and the struggle of American

courts to come up with the right answers.5 The discussion divides the cases

https://www.hcch.net/en/instruments/conventions/status-table/?cid=98 (last updated

May 2017) [https://perma.cc/KJ8N-SWEE].

3. Logically, a court determines first whether the clause is enforceable and

then, if necessary, undertakes its interpretation. In some cases, however, the court

must interpret the clause—for example, to determine whether it is exclusive or

whether it encompasses the disputed tort claims—before deciding its enforceability.

4. Because of the doctrine of separability or severability of the FS clause from

the rest of the contract, it is possible for the clause and the contract to be governed

by different laws. To keep things relatively simple, this Article does not address this

possibility. For the doctrine of separability, see SYMEON C. SYMEONIDES, OXFORD

COMMENTARIES ON AMERICAN LAW: CHOICE OF LAW 460–62 (2016).

5. A related issue is whether, in answering these questions, a federal court

sitting in diversity should employ federal or state law standards. This Article does

not discuss this issue. For discussions of this issue, see, for example, Matthew J .

Sorensen, Enforcement of Forum-Selection Clauses in Feder al Court after

Atlantic Marine, 82 FORDHAM L. REV. 2521 (2014); Kelly A. Blair, A Judicial

Solution to the Forum-Selection Clause Enforcement Circuit Split: Giving Erie a

Second Chance, 46 GA. L. REV. 799 (2012); Maxwell J. Wright, Enfor cing

Forum-Selection Clauses: An Examina tion of the Current Disarray of F ederal