February 22, 2021 Articles

State Laws May Invalidate Forum Selection Clauses in Construction Contracts

Even if a construction contract contains a forum selection clause, parties to the contract must give careful consideration to the laws of the state where the project is performed.

By Whitney Judson

Many construction contracts include forum selection clauses, which represent the parties’ expectations and intentions to resolve construction contract disputes within a specific state or jurisdiction. The ability to designate a location for dispute resolution on the front end of a project can give the parties a greater sense of comfort and control in the performance of a construction contract. Generally, forum selection clauses are enforceable and respected by courts. The Supreme Court of the United States, in Atlantic Marine Construction Co., Inc. v. U.S. District Court for Western District of Texas, held that “when the parties’ contract contains a valid forum-selection clause, that clause represents their agreement as to the most proper forum . . . and should be given controlling weight in all but the most exceptional cases.” As a result, federal courts are required to enforce valid forum selection clauses in construction contracts. State courts, however, may not be bound by federal court holdings. State legislatures may therefore pose challenges to the enforcement of forum selection clauses in construction contracts through the enactment of statutes that may invalidate these contractual provisions.

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