The Puzzle of Floating Forum Selection Clauses

Abstract

Among all the recent innovations in the field of contract procedure, the floating forum selection clause is perhaps the most ingenious. Unlike most forum selection clauses, the floating clause does not name a specific jurisdiction in which to resolve disputes. Instead, it ties the choice of forum to a mutable fact that can change after the contract is signed. Floating clauses allow businesses to retain their home court advantage when they decide to relocate their headquarters. They facilitate the assignment of contracts to third parties. And they help foreign insurance companies attract U.S. customers. To date, however, these provisions have attracted only sporadic attention in the literature.

This Essay provides a concise descriptive account of floating forum selection clauses. It examines when U.S. courts will and will not rely on them to obtain personal jurisdiction over parties that otherwise lack minimum contacts with the forum. It then draws upon this descriptive account to explore the tension between the concepts of “waiver” and “submission” and argues that the differing outcomes in cases involving floating clauses may be partially explained by which concept is brought to bear on the question.

Keywords: forum selection clauses; contract procedure; contracts; jurisdiction; venue