Knowing where to bring a lawsuit and what state’s laws to apply can have a huge impact on the success of business litigation. Courts have developed extensive and complicated rules and procedures for determining where a lawsuit should be brought and which jurisdiction’s laws to apply, but that procedure is rarely simple or straightforward. Conflicts between the laws of two or more states can complicate the matter further. Agreeing in advance to jurisdiction and venue can provide certainty and save a great deal of time and money in the unfortunate event litigation does ensue. For this reason, companies often address in the contract itself how any disputes or litigation will be handled. A common example includes “forum selection” or “choice of venue” provisions, which identify a specific state (or even a specific county within a state) as the proper jurisdiction and venue for litigation.
Forum selection is a particularly important part of a contract when the parties are from different jurisdictions, especially when the laws of those jurisdictions differ significantly from one another. A forum selection provision gives a business the security of knowing that any litigation will take place in a familiar location applying a familiar set of substantive laws. However, a poorly worded forum selection provision may not provide the security hoped for as a recent opinion from Delaware’s Chancery Court in a partnership dispute case demonstrates. The case, In re Bay Hills Emerging Partners I, L.P., et al, involved the issue of whether a forum selection provision in a limited partnership agreement required all lawsuits to be filed exclusively in Kentucky. Continue reading