February 05, 2014 Articles

Supreme Court Strengthens Forum-Selection Clauses

These clauses should be enforced in all but "the most exceptional cases"

by Bradford S. Babbitt

Contracting parties have always been free to agree in advance about the location in which they will resolve any future dispute over their contract.  But courts have not always enforced contractual forum-selection clauses, sometimes allowing a plaintiff to sue in a forum different from that established by the contract. In deciding whether to enforce a forum-selection clause, these courts have allowed issues of the parties' convenience to trump their contractual choice—opening the door to forum-shopping and potentially rewarding the winner of a race to the courthouse.

In a recent, unanimous decision, the U.S. Supreme Court strengthened the power of contracting parties to decide where their disputes will be resolved by ruling that contractual forum-selection clauses should be enforced in all but the "most exceptional cases." The Court's decision in Atlantic Marine Construction Company, Inc. v. U.S. District Court for the Western District of Texas, 133 S. Ct. 1748 (2013), undermined parties' ability to shop for the most favorable forum regardless of their contractual forum selection.

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