Choice of Forum Clauses: Where Disputes Get Resolved
What Is a Choice of Forum Clause?
A choice of forum clause (also called a forum selection clause) specifies which court or jurisdiction will hear any disputes arising from the contract. Instead of fighting over where a lawsuit should be filed, the parties agree in advance on the location.
For example, a contract might state that all disputes must be litigated in the state or federal courts located in New York County, New York.
Mandatory vs. Permissive Forum Selection
Mandatory — The parties must bring all disputes in the designated forum. Typical language: "shall be brought exclusively in..." Courts will generally dismiss cases filed elsewhere.
Permissive — The designated forum is an option but not exclusive. Typical language: "may be brought in..." Either party can still file in other appropriate jurisdictions.
The distinction matters enormously. A mandatory clause locks you into a specific location, while a permissive clause merely establishes one acceptable option.
Why Forum Selection Matters
- Travel costs — Litigating far from home increases legal expenses significantly
- Local advantage — Local parties may benefit from familiarity with local courts and procedures
- Different legal standards — Forum courts apply their own procedural rules, which can affect outcomes
- Jury composition — Different jurisdictions have different jury pools and tendencies
- Court efficiency — Some jurisdictions resolve cases faster than others
Choice of Forum vs. Choice of Law
These are separate provisions:
- Choice of forum — Where the case is heard
- Choice of law — Which state's or country's substantive law applies
A contract can specify that disputes are heard in Texas courts but governed by Delaware law.
What to Watch For
- Distance and convenience — Avoid agreeing to forums that are unreasonably far from your location
- Mandatory vs. permissive language — Ensure you understand whether the clause is exclusive
- Federal vs. state court — Some clauses specify one or the other; consider which is more favorable
- Interaction with arbitration — If the contract has an arbitration clause, the forum selection may apply to any court proceedings related to the arbitration
When to Consult a Lawyer
Consider having an attorney evaluate forum selection clauses, especially in contracts with counterparties in distant jurisdictions. The location of disputes can significantly affect litigation strategy and costs.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.