Forum Selection Clause
A contract provision that designates the specific court or location where any disputes arising from the agreement must be brought, providing predictability and limiting forum shopping.
What Is a Forum Selection Clause?
A forum selection clause (also called a venue clause or jurisdiction clause) is a contract provision specifying the geographic location and court system where lawsuits arising under the contract must be filed. The clause provides certainty about where disputes will be resolved, prevents parties from choosing inconvenient forums to gain strategic advantage, and reduces jurisdictional disputes. Forum selection clauses can be either exclusive (mandatory) or permissive (optional).
Exclusive vs. Permissive
- **Exclusive forum selection**: requires that all disputes be filed only in the designated court; suits filed elsewhere will be dismissed or transferred - **Permissive forum selection**: states that the parties consent to jurisdiction in the named forum but do not preclude filing elsewhere where jurisdiction otherwise exists
Drafters should use clear mandatory language ("shall be brought exclusively in," "the parties consent to the exclusive jurisdiction of") to create an exclusive clause.
U.S. Enforceability
The Supreme Court endorsed forum selection clauses in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), establishing the modern framework. Courts enforce these clauses unless the resisting party shows they are unreasonable and unjust, the result of fraud or overreaching, or contrary to a strong public policy of the forum state. Under Atlantic Marine Construction Co. v. U.S. District Court, 571 U.S. 49 (2013), federal courts must transfer cases filed in violation of a forum selection clause under 28 U.S.C. § 1404(a). The clause typically should be paired with a choice of law clause and waiver of personal jurisdiction objections.