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Abstract

A common practice in commercial agreements is to include a clause setting out where litigation will take place in case of a dispute between the contracting parties (a “forum selection clause”). The natural expectation of parties using such clauses is that in the event of litigation between them, this stipulation will be treated the same way as other contractual stipulations, including in the context of conflict of laws. According to the general principles of choice of law rules for contracts, the law of the contract should govern the validity and interpretation of forum selection clauses. In the case of a contract that contains a choice of law clause, the law of the contract is the law chosen by the parties. This means that questions concerning the validity of forum selection clauses, such as whether there was mutual assent, and questions of interpretation, such as whether the clause is mandatory or permissive, should be governed by the law chosen by the parties.

The article starts by showing how U.S. courts, as well as English courts, often decide the questions of validity and interpretation of forum selection clauses under the forum law, and not the law of the contract—even where this law has been chosen expressly. The article then examines the debate that has emerged mainly in American literature over the question of which law should govern these questions—the law of the contract or forum law. The article shows that the discourse on the subject reveals a growing tendency towards the application of forum law to these questions. The article seeks to change the direction of this trend.

Following that, the article raises two arguments that have not been adequately discussed in favor of applying the law of the contract. First, the article shows how the application of forum law makes it difficult for parties to anticipate at the drafting stage which law will be applied to the forum selection clause, and, consequently, what law will apply to its validity and interpretation. Second, the article argues that applying the law of the forum is inconsistent with Anglo-American theoretical jurisdictional and procedural legal thinking on forum selection clauses.

The article then concludes by proposing a contractual approach for choosing the law that should govern these questions. This approach reinforces the contractual aspect of forum selection clauses. At the same time, it acknowledges the crucial role of overriding mandatory provisions of both the seized forum and the designated forum in deciding the validity of these clauses, thus safeguarding important public interests.

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