However, local laws sometimes modify or invalidate these kinds of agreements. For example, in 2011, the Supreme Court of Canada ruled that the B.C. Business Practices and Consumer Protection Act overrode an arbitration clause in a consumer contract.
A similar issue recently arose when a B.C. resident tried to initiate a class action lawsuit in B.C. against Facebook.
Facebook appealed. On June 19, 2015, the B.C. Court of Appeal ruled in Facebook’s favour, upholding the forum selection clause and staying the action in BC.
Critically, the BC Court of Appeal concluded that Justice Griffin had “failed to give effect to the principle of territoriality. […] B.C. law applies only in B.C. Our Legislature is powerless to affect the law of other jurisdictions.” In the BC Court of Appeal’s view, section 4 of the BC Privacy Act only granted exclusive jurisdiction within the province of B.C.; it had no effect on the jurisdiction of courts in California.
According to well-established principles of private international law (also known as “conflict of laws”), Facebook, as the party seeking to enforce the forum selection clause, had the burden to show that the clause was valid, clear and enforceable, and applied to the dispute. The plaintiff had effectively conceded these points at trial. The burden of proof then shifted to the plaintiff to show “strong cause” why the clause should not be enforced.
The plaintiff’s argument on this point relied on the inference that California courts would not have jurisdiction to hear the case. But the plaintiff had offered no basis for such a conclusion other than s. 4 of the Privacy Act. Having concluded that this provision had no effect on the California courts, the Court of Appeal was forced to conclude that the plaintiff had failed to meet the burden of proof. Accordingly, there was no reason not to apply the forum selection clause.
Lessons for Businesses
For users, the main lesson should be that courts will not lightly set aside forum selection clauses. One cannot simply ignore the “boiler plate” terms of these agreements. They generally have real meaning and effect.