Where battle is waged can be a very practical strategic consideration in any litigation. So if you had the chance to choose to have home court advantage, why wouldn’t you? Many times this can be done by agreement. Parties can agree to the appropriate “forum” in the event a dispute arises between them and litigation ensues.
It is well settled that the parties to a contract may agree in advance to submit to the jurisdiction of any court. The modern trend is to uphold the enforceability of a “forum selection clause” where those clauses are clear and unambiguous. Such a clause is generally enforceable when the parties have freely agreed that litigation shall be conducted in a particular forum and where such an agreement is not unreasonable at the time of litigation. Furthermore, a forum selection clause in a commercial contract between business entities is presumptively valid and will be deemed enforceable unless: 1) the clause itself was induced by fraud or is overreaching; 2) the forum selected in the clause is so unfair or inconvenient that a party, for all practical purposes, will be deprived of an opportunity to be heard; or 3) the clause is found to violate public policy.
ARRO Consulting, Inc. v. Bennett, Brewer & Associates, LLC recently considered a forum selection clause which turned out to be less than clear. A dispute arose between a Pennsylvania engineering firm and a Maryland land development firm. The agreement between them contained the following forum selection clause which itself became the subject of dispute: Governing Law. The laws of the Commonwealth of Pennsylvania shall govern the validity of this agreement, its interpretation and performance. Any litigation arising in any way from this agreement shall be brought in the Courts of Common Pleas of Pennsylvania having jurisdiction.
The plaintiff filed suit in Pennsylvania. The defendant sought to dismiss the case based upon the argument that according to the forum selection clause, the phrase “having jurisdiction” meant that a party to the agreement may file suit in Pennsylvania, but only if Pennsylvania had “personal jurisdiction” over the defendant. The defendant, based in Maryland where the project was, claimed that but for the agreement with the plaintiff, it did not have “minimum contacts” required for Pennsylvania to exercise personal jurisdiction. The defendant argued, therefore, that suit could not be brought in Pennsylvania. The trial court agreed.
On appeal, however, the Superior Court reversed. The Court concluded that the mandatory language “shall be brought” evidenced the parties intent to choose Pennsylvania rather than Maryland as the forum for resolving legal disputes. Any other interpretation, according to the Court, would render the remainder of the forum selection clause meaningless. The Court stated that by interpreting the phrase “having jurisdiction” as meaning “having personal jurisdiction,” the trial court failed to give effect to the words immediately preceding – “shall be brought in the Courts of Common Pleas of Pennsylvania…”
The fact that the trial court and the appellate court in ARRO differed in their interpretation is enough to suggest that the forum selection clause could have, and should have, been clearer. By way of example, the clause simply could have said that in the event of any dispute, the parties consent to jurisdiction in Pennsylvania, that they agree that it shall be resolved and tried exclusively in the Court of Common Pleas of a particular county in Pennsylvania, and further, that they agree that Pennsylvania law applies.
If there is an opportunity to agree upon “home court,” do so as a way to control at least one variable in litigation. But be precise about it.