Another Choice of Forum, Another Choice of Law: Consensual Adjudicatory Procedure in Federal Court
85 Pages Posted: 1 Feb 2013
Date Written: 1988
Nothing is quite as pleasing as a legal doctrine that makes good, common sense. In a complex litigation system, the idea that people should be able to agree to where they will sue each other is one such satisfying proposition. Indeed, so enticing is the notion that people ought to be able to agree to the terms of any litigation, that federal courts have eagerly embraced the idea.
The ability of prospective litigants to choose in advance both the court that will hear the case and the law that will govern the dispute now enjoys widespread approval in federal courts. This was not always so. Indeed, the current doctrine of consensual adjudicatory procedure represents a wholesale abandonment of a 100-year taboo against party autonomy in procedural matters. The federal courts have been unusually quick to cast aside well-established jurisdictional tenets, as well as the arcane niceties of conflicts principles, and to import contract principles into the jurisdictional arena.
The doctrine of consensual adjudicatory procedure is now well entrenched in federal practice and is widely heralded as a form of salutary progressivism. The doctrine is lauded for enhancing the values of predictability, certainty, security, stability and simplicity. With court approval, party autonomy regarding crucial procedural determinations flourishes in an increasingly wider range of commercial and non-commercial settings. Some courts verge on the self-congratulatory when confronted with a forum-selection clause: not only is the court able to carry out the wishes of the parties, but the court also effectively demurs active participation in a breach of contract. Another benefit, not incidental, is that the enforcing court successfully accomplishes its own goal of docket-clearing. The sum of litigation is neither reduced nor simplified; it is simply shifted someplace else.
Precisely because the doctrine is so basically appealing and universally accepted, it is anathema to suggest that the doctrine of consensual procedure is problematic. And yet, as is true of many simple ideas, the simplicity masks or ignores complex issues. This deceptive little doctrine has taken root and continues to flourish without much thoughtful discussion or close analytical scrutiny. The central problem, however, is not one of inadequate doctrinal development — although this is a serious deficiency. The central problem is that substantial litigation rights are sacrificed to enhance purely prudential considerations. Contract principles now effectively usurp long-standing jurisdictional and conflict-of-laws rules, but courts and commentators have devoted scant attention to the deleterious effects of this quiet revolution.
Consensual adjudicatory procedure denotes the ability of potential or prospective litigants to choose, in advance of any litigation, the court that will hear the dispute and the law that will govern the substantive merits of the litigation. It is essentially a doctrine of procedural choices by consent of the parties. These choices and this consent are typically manifested in ‘forum-selection clauses' and ‘choice-of-law clauses' contained in an agreement between the parties. Although these agreements affect basic procedural rights, their interpretation is nonetheless irretrievably based in contract law. The thesis of this Article is that the supremacy of contract law over long-established jurisdictional doctrines has significantly eroded certain fundamental litigation rights. This is particularly egregious insofar as various mechanisms for securing consensual adjudicatory procedure are becoming pervasive throughout a wide array of party relationships. Not only has the overlay of contract law confounded jurisdictional principles, but the doctrine of consensual adjudicatory procedure is predicated on an analytical confusion of the concepts of jurisdiction, venue, forum non conveniens and choice-of-law.
The pervasive authority of contract principles in the procedural arena also has obfuscated a wide variety of troubling issues with regard to these forum and choice-of-law clauses. For example, it is unclear whether forum-selection clauses are matters of jurisdiction or venue, and whether this conceptual distinction makes an analytical difference for courts construing the validity of such clauses. For instance, should such clauses be construed according to procedural rules or contract principles? Assuming that such clauses are valid, there is confusion over the appropriate remedy for the party seeking enforcement of the clause; choices include dismissal, stay of jurisdiction, transfer or remand. And a final cause for confusion is the relationship of the doctrine of forum non conveniens to forum-selection clauses.
Contractual drafting methods also present a problem. At the broadest theoretical level, is there a significant difference between prorogation and derogation clauses and between mandatory and permissive clauses? In addition, are claims not narrowly covered by the contract clause also subject to the forum and choice-of-law provisions, or must the lawsuit be fragmented?
Moreover, these clauses raise complex federalism issues. Initially, there is the fundamental question whether the Supreme Court has created a new federal common law of consensual adjudicatory procedure, governed by federal common law contract rules. Beyond this basic point are an array of vexatious Erie problems. Adding further complication, are choice-of-law clauses substantive for Erie purposes under Klaxon Co. v. Stentor Electric Manufacturing Co., while choice of forum clauses are procedural under Stewart Organization, Inc. v. Ricoh Corp.? In contracts with concomitant choice-of-law and forum-selection clauses, should the choice-of-law provision be interpreted first so as to supply the rules of construction for the forum-selection clause? Furthermore, what is the relationship of these clauses, and to what extent do they function independently?
Federal procedural rules raise other troubling questions. For instance, the effect of federal enforcement of a choice-of-forum clause with a consequent transfer is uncertain. Does it make a difference that the transfer is accomplished under transfer provisions 25 or pursuant to the doctrine of forum non conveniens?
Similarly, what happens when a defendant removes the case from state court to federal court, but the plaintiff requests a remand to enforce a forum-selection clause? Finally, the lower federal courts' construction of forum and choice-of-law clauses is in disarray, lacking a unified analytical approach.
As the discussion demonstrates, the federal courts have not clearly thought through all the implications of consensual procedure. A more cautious approach is needed to justify the deleterious consequences of party autonomy on jurisdiction and choice of law.
Keywords: forum selection clauses, choice of law clauses, consent, jurisdiction, venue, forum non conveniens, civil procedure, Federal Rules of Civil Procedure
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