What options are available when a contract contains a forum selection clause? It’s a clause included in an agreement specifying where a dispute must be resolved, such as a court within a specific county or state.
In the facts underlying a Supreme Court decision late last year, one party to an agreement ignored the forum clause and filed suit against the other party in a locale different than what was specified. Litigation followed that sought to enforce the original forum choice. The Supreme Court had to wrestle with the mechanics of treating the enforcement of such forum clauses, which involved a lot of academic discussion of the Federal Rules of Civil Procedure.
So, what’s the big deal? Well forum selection clauses are often inserted in order to resolve disputes on your home turf. Among other things, this provides you with economic efficiencies and the possible application of rules and procedures you and your admiralty attorney understand. The bottom line is that this seemingly boilerplate-type clause can have a big impact should a dispute arise. This makes it a useful tool to include in your maritime agreements.
You should consider whether to make the forum selection clause mandatory and making certain the clause includes the federal court where your maritime dispute will most likely be resolved. Sometimes these clauses are pulled off the shelf and inserted into an agreement without much thought, such as when there’s no federal court in the specified forum. Your admiralty attorney should also be aware of more recent decisions that seem to underscore the importance of drafting broad clauses applicable to as many possible claims as might arise.
On the flipside, when you sign an agreement containing a forum selection clause, you may be hampering your ability to pursue a meaningful remedy. In this Supreme Court decision, the justices upheld the forum selection clause. In doing so, I believe the court made it harder to challenge the enforceability of these clauses in federal court.
The Supreme Court’s decision provided instruction to parties on how they should handle a forum clause dispute. The court’s decision last month pointed the parties in a single direction and said, “Go.”
