Picking the Favored Courthouse

March 10, 2011, 3:27 PM

The prior post illustrated one situation (among many) when picking a desirable venue to resolve a dispute might be the pivotal action in determining how that dispute will be resolved. Indeed, in this lawyer's opinion, if forced to choose between picking local law or local venue, I would almost always opt for the latter. The language is our own; the local court rules are accessible; our witnesses will be available; we can sleep in our own beds; and the cost of resolving the dispute will be much higher for the opposition than for ourselves. As a result, the likely outcome of settlement discussions will be much more favorable whenever the judicial venue following unsuccessful negotiations is favorable.

However, there is little assurance that a local court will serve as the forum for resolving a contractual dispute unless there is an agreement between the parties to make it the chosen venue. Otherwise, each party is free to argue for its own courts as the preferred venue, or perhaps even argue for the courts of a third jurisdiction where some or all of the alleged contract was to be performed.

Under the CISG, a forum-selection clause is an enforceable part of a sales contract. However, this begs the question as to whether there is an enforceable contract in the first place. Relying upon a choice of venue clause embedded in one party's boilerplate terms and conditions that the other party does not formally accept generally will not suffice, especially if the foreign party has dispatched its own boilerplate terms and conditions, stipulating a different judicial venue. In these circumstances, the seller and buyer will have failed to agree upon one of the "material terms" to an enforceable contract. Under the CISG, such competing forum-selection clauses would likely prevent the creation of a contract in the first place, leaving a party that seeks to enforce a contract claim judicially homeless. --Charles V. McPhillips