Interpreting Forum Selection Clauses

65 Pages Posted: 6 Oct 2017 Last revised: 25 Jul 2019

See all articles by John F. Coyle

John F. Coyle

University of North Carolina School of Law

Date Written: October 19, 2017

Abstract

Over the past half century, courts in the United States have developed canons of construction that they use exclusively to construe forum selection clauses. These canons play an important role in determining the meaning of these clauses and, by extension, whether litigation arising out of a particular contract must proceed in a given place. To date, however, these canons have attracted surprisingly little attention in the academic literature.

This Article aspires to fill that gap. It provides the first comprehensive taxonomy of the canons that U.S. courts use to construe forum selection clauses. These interpretive rules fall into four groups: (1) the canons relating to exclusivity, (2) the canons relating to scope, (3) the canons relating to non-signatories, and (4) the canons relating to federal court. When a judge is presented with ambiguous language in a forum selection clause, she will frequently turn to one of these interpretive rules of thumb to resolve the ambiguity.

In principle, each of these canons produces outcomes that are broadly consistent with the preferences of most contract drafters. In practice, this is not always the case. Drawing upon interviews and e-mail exchanges with eighty-six attorneys, the Article shows that several of these canons produce outcomes that are arguably inconsistent with majoritarian preferences. In such cases, the Article argues that these canons should be cast aside. In their place, the courts should adopt new interpretive default rules that more closely track the preferences of most contracting parties.

The Article’s final contribution to the literature relates to contract drafting. If a forum selection clause is unambiguous, there will be no need for the courts to invoke the canons. The Article thus concludes by urging contracting parties to incorporate certain words and phrases into their contracts ex ante so as to avoid incurring the costs associated with litigating their meaning ex post.

Keywords: forum selection clause; contract; boilerplate; interpretation; construction; surveys; interviews; empirical; canon; default interpretive rule

Suggested Citation

Coyle, John F., Interpreting Forum Selection Clauses (October 19, 2017). 104 Iowa Law Review 1791 (2019); UNC Legal Studies Research Paper. Available at SSRN: https://ssrn.com/abstract=3047989 or http://dx.doi.org/10.2139/ssrn.3047989

John F. Coyle (Contact Author)

University of North Carolina School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States
919-843-9634 (Phone)

HOME PAGE: http://www.law.unc.edu/faculty/directory/coylejohnf/

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