The Jurisprudence and Politics of Forum-Selection Clauses

Abstract

Recent US court enforcement of foreign forum-selection clauses is durable only to the extent that the clauses make the contracts more valuable to the parties. The clauses can create value by making dispute resolution more certain, reliable, sensible, or efficient. In a few cases, the clauses can create value by significantly increasing the costs of formal dispute resolution. However, sometimes forum-selection clauses create no value. Rather, they simply reflect the stronger contracting party's desire to litigate at home. In these cases, both parties to the contract prefer a legal rule under which foreign forum-selection clauses are not enforced. Forum-selection clauses in international shipping contracts appear not to create value for the parties. In contrast, arbitration provisions in these contracts might create value for both shippers and carriers.