Forum Selection Clause

A forum selection clause in a contract with a conflict of laws element allows the parties to agree that any litigation resulting from that contract will be initiated in a specific forum. There are three types of clause:

• the reference might be to a particular court in a jurisdiction agreed upon by the parties (although, if the parties make a mistake as to the power of the nominated court to hear the matter, the civil procedures of the nominated jurisdiction will be applied to identify the appropriate court); or
• the clause might refer to a specific kind of dispute resolution process, such as mediation, arbitration (see arbitration clause, lex loci arbitri), or a hearing before a special referee; or
• the clause might refer to both, requiring a specific process to be carried out in a specific location.

A simple forum selection clause covering both the proper law of the contract and the forum for resolving disputes might read:

“This contract is governed by the laws of England and any dispute shall be finally resolved by the English courts.”

In many cross-border contracts, the forum for resolving disputes may not be the same as the country whose law governs the contract. And the contract may provide for a staged procedure for resolving disputes. For example:

“1.This agreement shall be governed by and interpreted in accordance with the laws of England. 2.The parties shall endeavour to settle any dispute that arises by direct negotiation between their managing directors or similar senior executives but if direct negotiation does not result in a resolution of the dispute, either Party may require that it be referred to mediation in accordance with the CEDR (Centre for Effective Dispute Resolution) Mediation Rules at present in force. 3. Any dispute that is not settled by direct negotiation or by mediation shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.”