You’re Not in Kansas Anymore (even though you thought you were)

wizard-of-oz-charactersA forum selection clause in a contract can be a powerful tool. It essentially means that any lawsuit arising out of the contract must be filed in the jurisdiction specified in the contract. This can mean the difference between a company that does business across the country (or world) litigating cases in numerous jurisdictions or just one. While the inclusion of a well-drafted forum selection clause may not always be enforceable, Florida courts will generally find that it is enforceable as long as it’s not clearly unreasonable or unjust. [1][2]However, Florida courts will find seemingly mandatory forum selection clauses as permissive if the clause lacks words of exclusivity. For instance, the recent case of Michaluk v. Credorax (USA), Inc. decided by the 3rd District Court of Appeal focused on the following forum selection clause:

This Agreement shall be governed by and construed in accordance with the Laws of Malta and each party hereby submits to the jurisdiction of the Courts of Malta as regards any claim, dispute or matter arising out of or in connection with this Agreement, its implementation and effect.[3]

The Michaluk court held that the foregoing was a permissive rather than mandatory forum selection clause and therefore allowed the lawsuit to proceed in circuit court in Miami. The court relied on a long line of cases that held a forum designation must clearly indicate words of exclusivity for it to be enforceable. For instance, a clause indicating that “proper venue [is] in Palm Beach County” is permissive [4] while the clause “the parties hereto consent to Broward County, Florida as the proper venue for all actions that may be brought” is mandatory. [5] The difference between the two clauses is that the latter indicates an affirmative designation of only one forum by the use of the article “the” while the former clause does not.

I’ve reviewed many contracts that appear to be form contracts where the parties didn’t think much about the forum selection clause. Many times the forum selection clauses are unenforceable. It’s important to understand the nuances of Florida law on forum selection clauses not only when drafting contracts but when accessing the merits of undertaking litigation or defending a lawsuit.

[1] Travel Exp. Inv. Ins., v. AT&T Corp., 14 So.3d 1224, 1226 (Fla. 5th DCA 2009)
[2] M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972)
[3] Michaluk v. Credorax (USA), Inc., — So.3d —, 2015 WL 2215979 (Fla. 3rd DCA 2015)
[4] Regal Kitchens, Inc. v. O’Connor & Taylor Condo. Const., Inc., 894 So. 2d 288, 290 (Fla. 3rd DCA 2005)
[5] Golf Scoring Sys. Unlimited, Inc. v. Remedio, 877 So. 2d 827, 828 (Fla.4th DCA2004)