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Many international websites have online user agreements with forum selection clauses that refer all disputes to a foreign forum. This article discusses the question of whether and when such clauses should be enforced. On the one hand, they form part of a standard contract whose formulation is predetermined solely by the website, and when entered with a consumer reflect inequality of bargaining power that often result in de facto blocking the consumer’s access to courts. On the other hand, prohibiting altogether forum selection in e-commerce contracts would deprive the parties from enjoying the certainty and predictability that such an agreement otherwise would offer. It is important to establish appropriate rules for e-commerce contracts, which will provide sufficient protection for consumers on the one hand, without obstructing the development of e-commerce and the Internet on the other hand. This article develops a multidimensional model for handling forum selection clauses in online website agreements, that aims to balance between these opposing interests. This innovative model offers new criteria by adding clear considerations, with new specified parameters and criteria to be taken into account when considering whether or not to enforce the forum selection clause. These considerations help construct the judicial discretion regarding the validity and enforcement of forum selection clauses.

Who is bound by a forum selection clause? At first glance, the answer to this question may seem obvious. It is black-letter law that a person cannot be bound to an agreement without her consent. In recent years, however, courts have not followed this rule with respect to forum selection clauses. Instead, they routinely enforce these clauses against individuals who never signed the contract containing the clause. Courts justify this practice on the grounds that it promotes litigation efficiency by bringing all of the litigants together in the chosen forum. There are, however, problems with enforcing forum selection clauses against non-signatories. First, there is the unfairness of binding a litigant to a contract without her consent. Second, there is the danger that relying on a forum selection clause to assert personal jurisdiction over a non-signatory may be inconsistent with due process. This Article critiques the rules that determine whether a non-signatory is bound by a forum selection clause. It first documents the emergence of a new doctrine — the closely-related-and-foreseeable test — that the courts have created to facilitate this practice. It then argues that the test serves as a portal to a parallel due process universe in which casual contacts and breezy assertions of foreseeability can connect a defendant to a forum selection clause in a way that would be, at best, highly scrutinized were they construed as potential minimum contacts with the forum. In a world of ever-tightening personal jurisdiction standards, courts have created a bubble of nearly unlimited jurisdiction for parties in close proximity to forum selection clauses. To address this problem, the Article proposes reforms that would provide more robust protections to non-signatory defendants and, as importantly, impose a degree of order on an increasingly fractured due process landscape.

To restructure its debt, the Republic of Lebanon should conduct an exchange offer that transfers existing bonds into the hands of a fiduciary agent that is contractually bound to block any attempts to accelerate the debt by non-participating creditors. The exchange offer should also solicit consent to modify the forum selection clause in the old bonds, making Lebanon the exclusive forum for adjudicating disputes. Simultaneously, the Republic should clarify a crucial inconsistency in the Republic’s 2010 Fiscal Agency Agreement. Under Condition 15(a) of the relevant bonds, modifying non-payment terms like the forum selection provision arguably requires a lower threshold, which the agreement authorizes the Republic to supplement in accordance with prevailing market norms. Finally, the Republic should enact legislation that subordinates bondholders who attempt to challenge this interpretation. Together, these steps would considerably strengthen the Republic’s position with respect to potential holdouts.

Both economic and legal theory assumes that sophisticated parties routinely write agreements that maximize their joint surplus. But more recent studies analyzing covenants in corporate and government bond agreements have suggested that some contract provisions are highly path dependent and “sticky,” with future covenants only rarely improving upon previous ones. This Article demonstrates that the stickiness hypothesis explains the striking lack of choice-of-forum provisions in commercial contracts, which are absent in the majority of half a million material agreements reported to the SEC. When drafting these contracts, external counsel relies heavily on templates and whether or not a contract includes a forum selection clause is almost exclusively driven by the template that is used to supply the first draft. There is no evidence to suggest that counsel negotiates over the inclusion of choice-of-forum provisions, nor that law firm templates are revised in response to changes in the costs and benefits of incomplete contracting. Together, the findings reveal a distinct apathy with respect to forum choice among transactional lawyers that perpetuates contractual gaps. The persistence of these gaps suggests that default rules can have significantly greater implications for the final allocation of the contractual surplus than is assumed under traditional theory.

Over the past half century, courts in the United States have developed canons of construction that they use exclusively to construe forum selection clauses. These canons play an important role in determining the meaning of these clauses and, by extension, whether litigation arising out of a particular contract must proceed in a given place. To date, however, these canons have attracted surprisingly little attention in the academic literature. This Article aspires to fill that gap. It provides the first comprehensive taxonomy of the canons that U.S. courts use to construe forum selection clauses. These interpretive rules fall into four groups: (1) the canons relating to exclusivity, (2) the canons relating to scope, (3) the canons relating to non-signatories, and (4) the canons relating to federal court. When a judge is presented with ambiguous language in a forum selection clause, she will frequently turn to one of these interpretive rules of thumb to resolve the ambiguity. In principle, each of these canons produces outcomes that are broadly consistent with the preferences of most contract drafters. In practice, this is not always the case. Drawing upon interviews and e-mail exchanges with eighty-six attorneys, the Article shows that several of these canons produce outcomes that are arguably inconsistent with majoritarian preferences. In such cases, the Article argues that these canons should be cast aside. In their place, the courts should adopt new interpretive default rules that more closely track the preferences of most contracting parties. The Article’s final contribution to the literature relates to contract drafting. If a forum selection clause is unambiguous, there will be no need for the courts to invoke the canons. The Article thus concludes by urging contracting parties to incorporate certain words and phrases into their contracts ex ante so as to avoid incurring the costs associated with litigating their meaning ex post.

This paper examines whether the Court Jurisdiction and Proceedings Transfer Act has readied Canada to adopt the 2005 Hague Choice of Court Convention. Reviewing the Convention as well as previous and current law and cases on forum selection clauses in common law Canada, including the very recent Supreme Court decision in Douez v Facebook, yields two conclusions. First, there are existing interpretive challenges flowing from gaps in the CJPTA with respect to jurisdictional clauses that need to be addressed. Second, the principles governing forum selection clauses in Canada are largely consistent with those put forward in the Hague Convention and should not be perceived as obstacles to its adoption.

Appellate caselaw on arbitration-related issues is replete with cases involving the question whether a motion to compel arbitration was properly granted or denied. Currid v. Coit Cleaning & Restoration Services, No. 01-17-00630-CV (Tex.App. – Houston [1st Dist.] 2018) presents a less common scenario: A contractor sued a homeowner for additional amounts allegedly owed under a contract for remediation of water-damage at her home. Defendant Homeowner answered the lawsuit through an attorney but did not promptly file a motion to compel arbitration. Defendant-Homeowner instead invoked the arbitration clause contained in the underlying contract in opposition to the Contractor’s motion for a final summary judgment against her. Within the same response, the Homeowner Defendant cross-moved for dismissal on the ground that the lawsuit had been filed in the wrong forum. A visiting judge granted the summary judgment for the Contractor and the presiding judge of the trial court later denied the Homeowner’s motion for reconsideration, opining that the Homeowner had brought up arbitration too late. On appeal, the Contractor defended the summary judgment on arbitration-waiver grounds. The amicus curiae brief submitted in support of the Homeowner argues that the arbitration defense was not waived procedurally because it had been timely asserted in opposition to the Plaintiff’s motion for summary judgment, and that the contractual right to arbitrate had not been waived substantively under the waiver factors the Texas Supreme Court had articulated in Perry Homes v. Cull, 258 S.W.3d 580, 593-94 (Tex. 2008). Nor had the Contractor’s waiver argument been timely under the summary judgment rule. Unlike the homeowners in Cull, the homeowner here had not brought the lawsuit in the first instance; had not switched from first choosing litigation and then seeking a transfer to arbitration for tactical reasons; had not herself substantially invoked the litigation process; and had not even defended the claim against her on the merits, insisting instead that it was being pursued in the wrong forum. The brief also addresses the matter of the arbitration clause also being a forum selection clause, which takes it beyond the procedural framework governing arbitration-related motions under the Federal Arbitration Act (FAA) and the Texas General Arbitration Act (TGAA or TAA). Date of Abstract: April 7, 2018 Date of Amicus Brief: December 26, 2017

Arbitration has been the predominant form of dispute resolution in the securities industry since the 1980s. Virtually all brokerage firms include pre-dispute arbitration agreements (PDAAs) in their retail customer contracts, and have successfully fought off challenges to their validity. Additionally, the industry has long mandated that firms submit to arbitration at the demand of a customer, even in the absence of a PDAA. More recently, however, brokerage firms have been arguing that forum selection clauses in their agreements with sophisticated customers (such as institutional investors and issuers) supersede firms’ duty to arbitrate under FINRA Rule 12200. The Courts of Appeal currently are split on the question of whether, under general principles of contract interpretation, FINRA member firms can circumvent their duty to arbitrate by inserting forum selection clauses in their customer agreements.Most of these courts have not addressed the argument that the anti-waiver provision of the Securities Exchange Act of 1934 (§ 29(a)) bars securities firms from forcing customers to waive their right to arbitrate disputes. The Supreme Court long ago interpreted § 29(a) to apply to waivers of substantive rights arising under the Exchange Act. Is the right to arbitrate in the FINRA forum, which is heavily regulated by the SEC to promote investor protection, a right that cannot be waived? This paper will explore the interaction between the anti-waiver provision of the Exchange Act, and the right of a customer to demand a particular dispute resolution process. This paper argues that investors’ long-standing right to choose arbitration in the securities industry is a right that brokerage firms cannot force their customers to waive.

There is an increasing risk of overlapping jurisdictions and conflicting decisions due to the growth of preferential trade agreements (PTA) containing dispute settlement mechanisms. This study examines legal techniques to be used for dealing with conflicts of jurisdictions and other ways of promoting coordination between forums. Based on an analysis of principles of international law applied by domestic and international tribunals, we identify legal techniques that can be used by WTO adjudicating bodies based on their inherent powers to decide on matters related to their own jurisdiction. While the principle of estoppel gives a more solid basis for halting proceedings, the suspension of proceedings based on comity may be applied under certain circumstances as soft way of promoting coordination. For future PTA, the inclusion of an explicit forum selection clause may avoid duplication and prevent misuses. We thus examine under what legal basis forum selection clauses could be taken into consideration in the WTO. It is argued that the good faith obligation contained in the DSU as well as the international rules on state responsibility could serve for that purpose provided the rights and interests of other participants in the dispute or the integrity of the process are not adversely affected.

The burgeoning literature on private contractual choice of procedure has run up against a difficult empirical reality: the available empirical evidence reveals surprisingly little use of customized procedural rules in contracts between sophisticated parties. One likely reason for so little customization is that contractual relationships entail multiple risks, and it is very difficult to specify customized procedures that would optimally handle all potential disputes. In this article, we identify and analyze an alternative mechanism by which procedural customization commonly takes place in contracts: the use of carve-outs from arbitration. A carve-out is a contract provision by which the parties exclude (or carve out) certain claims or remedies from their arbitration clause. Carve-outs are a mechanism by which parties choose between court and arbitral bundles of procedures on a claim-by-claim basis. The claim-based choice makes more sense in that it enables the parties to choose procedures tailored to individual contractual risks. With such clauses, parties are able to obtain a more carefully calibrated procedural customization than provided by an arbitration clause or forum selection clause alone, but at a much lower overall cost than they would incur by attempting to develop customized procedural rules. This article sets out a model of the decision to use carve-outs and provides a detailed empirical examination of their use. Our analysis has a number of implications for the continued necessity of courts and their governing legal rules, the legal enforceability of carve-outs, and court treatment of the severability of claims from arbitration clauses more generally.

Forum selection provisions are commonly found in the material contracts of publicly traded corporations. But they are exceedingly rare in the organic documents of the same publicly traded entities. Why?This article documents that, as of June 30, 2011, only 133, or 1.49 percent, of publicly traded entities had forum selection provisions in their charters or bylaws. The vast majority of these provisions, 117 (88.0 percent), were adopted after Delaware Chancery’s March 15, 2010, decision in Revlon observing that corporations could avoid forum disputes by adopting forum selection provisions in corporate charters. Of the forum selection provisions adopted by corporations, 58.6 percent appear in corporate charters and 41.4 percent appear in bylaws adopted without prior shareholder consent. More than 91 percent of these provisions follow the form introduced by Netsuite in conjunction with its 2006 IPO, and approximately 16.06 percent of all IPOs declared effective since Revlon are of corporations whose charters contain forum selection provisions. Corporations headquartered in California are over-represented in the population of corporations that have adopted these provisions.The historic scarcity of forum selection provisions in the organic documents of publicly traded entities is consistent with the observation that, prior to the early part of this century, intra-corporate litigation was almost always brought in the state of incorporation. In such an environment, the selection of a state of incorporation acted as a de facto forum selection clause, and these clauses could reasonably have been viewed as surplusage. But as plaintiff counsel began to litigate intra-corporate claims with vastly greater frequency in courts away from the state of incorporation, a demand emerged for a contractual provision that could restore the pre-existing jurisdictional equilibrium in which each state’s courts specialized in the interpretation of that state’s corporate law. Viewed from this perspective, the intra-corporate forum selection clause is not an innovation that seeks to disrupt traditional litigation processes: it is, instead, better viewed as an effort to restore an equilibrium that had prevailed for decades and that reflected the natural expectation of corporations and shareholders alike that courts would “stay in their lane” as they specialized in the interpretation of their own state’s corporation laws.

Forum selection and arbitration clauses are a mainstay of international commercial agreements. Contracting parties often negotiate and insert a clause specifying either the chosen forum for adjudicating any disputes arising from the contractual relationship, or agreeing to arbitrate the dispute. This paper will briefly explore the implications of promoting a social contract model for advancing and adjudicating international human rights claims in Canada from the perspective of the differing judicial approaches to the enforceability of forum selection and arbitration clauses.

A Forum Selection Clause is a clause that determines contractually the venue and the legal system to be applied in case of a dispute arising between or among parties. This work compares the legal positions of the above three jurisdictions: United States, England and South Africa. This work can be useful to commercial arbitrators and lawyers alike.

The last decade has seen an exponential growth in the formation of regional trade agreements (RTAs) and the development of regional dispute settlement mechanisms (DSMs). One of the most significant RTAs is the nascent ASEAN-China Free Trade Area (ACFTA) which has set-up its own untested DSM. There is often considerable overlap between a World Trade Organisation (WTO) Member's treaty obligations under a RTA and under the WTO covered agreements. Accordingly, it is not uncommon for a single trade dispute to give rise to claims for breaches of both regional and WTO treaty obligations. The WTO has a tested DSM for the adjudication of disputes under its multilateral agreements. Nevertheless, the rules it can and will apply to resolve jurisdictional conflicts with regional DSMs remain unclear. This paper explores the propensity for jurisdictional conflict between the WTO and ACFTA DSMs. It then examines the extent to which such conflict can be resolved by the forum selection clause of the ACFTA and the application of Article 41 of the Vienna Convention on the Law of Treaties (VCLT).

We study jury trial waivers in a data set of 2,816 contracts contained as exhibits in Form 8-K filings by reporting corporations during 2002. Because these contracts are associated with events deemed material to the financial condition of SEC-reporting firms, they likely are carefully negotiated by sophisticated, well-informed parties and thus provide presumptive evidence about the value associated with the availability of jury trials. Only a small minority of contracts, about 20 percent, waived jury trials. An additional nine percent of contracts had arbitration clauses that effectively preclude jury trials though the reason for arbitration clauses need not specifically relate to juries. We explore three groups of factors to explain the pattern of jury trial waivers: (1) contract-specific factors: the subject matter of a contract, a measure of its standardization, choice of law, and choice of forum, (2) contracting-party factors: domestic vs. international status, place of business, place of incorporation, attorney locale, and industry, and (3) factors external to the contracts and parties: perceptions of local jury fairness in the forum specified in the contract and the relative length of jury and bench trial queues in that forum. Contract-type is significantly associated with jury trial waivers. For example, over 50 percent of security agreements and over 60 percent of credit commitments waived jury trials. In contrast, only five percent of employment contracts, two percent of bond indentures, and 3.5 percent of pooling service agreements waived jury trials. Choice of forum, greater contract standardization, and perceived fairness of juries are significantly associated with jury trial waivers. Over 80 percent of the contracts designating Illinois as a forum contained jury trial waivers whereas less than half the contracts designating New York as a forum, and only about one-third of the contracts designating California, Texas, or Florida as a forum contained waiver clauses. Jury trial waivers were not more common in international contracts. Our results suggest that, contrary to a widespread perception about the alleged inadequacies of juries in complex business cases, sophisticated actors may perceive that juries often add value to dispute resolution.

Both in the United States and in Europe, corporations are free to choose the applicable corporate law by incorporating in the jurisdiction of their choice. However, smaller firms face a number of obstacles in exercising that choice. One such obstacle concerns the law on adjudicative jurisdiction: In the United States as well as in the European Community, corporations are exposed to third-party suits in their state of incorporation even if they have no other ties to that state. In this Article, I argue that while the relevant rule may not matter much in the United States, it probably imposes a considerable burden on corporations in Europe. Moreover, I show that there is no convincing justification for the relevant Community law rule. It does not promise to increase the combined gains reaped by contracting parties, nor can it be expected to achieve either a substantive increase in positive externalities or a significant reduction in negative externalities. Finally, it cannot even be justified persuasively on fairness grounds.