The consent to jurisdiction and forum selection clause in a contract sets forth the location where any disputes relating to the agreement will be resolved. This can be a rather important clause, particularly when parties to a contract reside in or do business in two different countries. A typical formulation of such a clause (dealing with potential litigation, rather than arbitration) is set forth below:
Consent to Jurisdiction and Forum Selection The parties hereto agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated exclusively in Federal courts located within the State and County of New York, USA.
The drafter’s goal should always be to choose a forum which is most favorable for your client. Normally, clients prefer to have any action or proceeding take place where they reside or do business. However, there may be strategic advantages to choosing courts located in other jurisdictions. The laws of a particular jurisdiction may be more favorable to your client with respect to the subject matter of the contract. There can also be discrepancies among jurisdictions as to whether the losing party has to pay litigation costs. Finally, some courts are simply faster than others, allowing your client to obtain a judgment more quickly if the need arises to go to trial. All of these factors should be taken into account prior to the drafting of a jurisdiction or forum selection clause. It is important to choose the best, not merely the most convenient, forum for your client.