In this blog, we typically review forum-selection cases in the context of internet-related contracts and software licenses. A recent decision out of the US Supreme Court squarely addressed the issue of forum-selection clauses in a construction contract. While this is not an intellectual property case, it is instructive for Canadian companies entering into any contract in the US. To review, a “forum-selection clause” is a provision in a contract which picks a particular country or province or state for the resolution of disputes - put another way, it’s the place where litigation would be started in the event of a dispute.
In Atlantic Marine Construction Co., Inc. v. U.S. District Court For The Western District of Texas , the US Supreme Court indicated that where the parties have elected to include a forum-selection clause in their contract, that clause “represents [their] agreement as to the most proper forum,” and should be “given controlling weight in all but the most exceptional cases.”.
The Court went on to say that:
- First, if one party defies the forum-selection clause by commencing a lawsuit in another jurisdiction, that party has the burden of convincing the court that the case shouldn’t be transferred to the forum named in the agreement.
- Second, “the court should not consider the parties’ private interests aside from those embodied in the forum-selection clause; it may consider only public interests.” Public-interest factors will not typically override the forum-selection clauseexcept in very unusual cases.
- Lastly, if a party is bound by a forum-selection clause and they choose to flout those contractual obligations by filing a lawsuit in a different forum, then they don’t get the benefit of applying the choice-of-law rules in the jurisdiction in which they filed. In other words, they can’t improve their chances of success by filing in a state with favourable choice-of-law rules. They will be bound by the choice-of-law rules of the forum named in the forum-selection clause.
The US Supreme Court has confirmed that forum-selection clauses should be upheld in the US.