Reconciling Forum-Selection and Choice-of-Law Clauses

Abstract

When a contract includes both a forum-selection clause and a choice-of-law clause, which sovereign’s law governs the forum-selection clause? Does the seised court first apply its own law to the forum-selection clause or does it look first to the parties’ chosen law to enforce and interpret the forum-selection clause? It is a chicken-or-egg conundrum.

On the basis of case law and policy arguments, I argue that lex fori governs the enforceability and validity of the forum-selection agreement. But the whole chosen law, if there is a choice-of-law clause, or the whole law of the chosen court, if there is no choice-of-law clause, should apply to interpretation or construction of the forum-selection agreement.

Keywords: forum-selection clause, choice-of-law clause

JEL Classification: K40, K12