Do You Have the Right Type of Forum Selection Clause?

Patrick BarthetContracts

It may not seem very important, that forum selection clause in your construction contract specifying where it is that any legal dispute is to be brought and decided. After all, you think, we’re not going to get involved with lawyers on this project. Maybe think again.

With the amount of construction activity all around us these days, it is inevitable that some projects will end up in litigation. And when they do, those forum selection clauses can make a big difference. After all, would you want to be handed off to a court in another city or would you want to stay in your own backyard to address any issues? Most folks and their construction lawyers prefer the home court advantage.

That said, do you know that if not expressed correctly, the forum selection clause may only be permissive and not mandatory. What this means is that though you thought you were selecting the place where your dispute would be addressed, you may have simply selected a preferred venue but not precluded the selection of a different place by the opposing party. A mandatory clause, on the other hand, states clearly that jurisdiction and venue are appropriate exclusively and only in the chosen location and court.

Just using the term “shall” may appear to be sufficient to establish that the forum selection is mandatory. But many courts have ruled that this is not necessarily so. Stating that one court, say the Circuit Court of Miami Dade County, Florida, should be the forum does not in and of itself mean that other courts do not have jurisdiction.

If the parties want that certainty, then they must state their desire unequivocally and unambiguously. Being precise counts. If you want to be in a particular Court then the forum selection clause in your contract should specifically state that that particular court shall have sole and exclusive jurisdiction to hear any dispute.