Enforcing Inbound Forum Selection Clauses in State Court

Abstract

A forum selection clause is a contractual provision that selects a court for future disputes. Such clauses serve two primary functions. First, they may be used to redirect litigation from one state to another (an “outbound” clause). Second, they may be used to extend the personal jurisdiction of the chosen court over the contracting parties (an “inbound” clause). To date, scholars have focused most of their attention on the redirecting function played by outbound clauses. In this Article, we provide a definitive account of the role played by inbound clauses as means of obtaining personal jurisdiction over out-of-state defendants.

This account is based on our review of 283 published and unpublished state court cases where the defendant challenged the enforceability of an inbound forum selection clause. We show that state courts currently enforce inbound clauses in the overwhelming majority of cases. They enforce them in consumer contracts of adhesion. They enforce them where the identity of the chosen jurisdiction is not clearly spelled out. And they enforce them when the chosen forum is extremely inconvenient. The end result is a legal regime where distant courts routinely assert personal jurisdiction over weaker contracting parties on the basis of inbound forum selection clauses.

This state of affairs is inequitable and unjust. To remedy the situation, this Article advances several proposals to reform the existing law in this area. First, we argue that courts should not enforce inbound clauses against unsophisticated actors in contracts of adhesion. Second, we argue that courts should not enforce these clauses when there is no way for the defendant to identify the chosen jurisdiction at the time of signing. Lastly, we argue that courts should not enforce these clauses when the chosen court is not in a reasonably convenient location.