Forum Selection Agreements as Indicators of Implied Choice of Law

Image by G.C. from Pixabay

Originally posted on the EAPIL blog on 31 August 2023, and currently updated in this blog.

In a recent article, I explore what should be globally significant in a forum selection agreement as an indicator of the implied choice of law when the agreement omits a choice-of-law clause.

This topic is in itself a very old one, dating back to the late 19th century when English judges in Hamlyn & Co v Talisker Distillery, explicitly held that in the absence of an express choice of law, a choice of forum agreement would imply the choice of law. The popular Latin maxim for this is: Qui eligit forum vel iudicem eligit ius. Currently, however, this topic is ill-defined, notoriously complex, and a hotly debated issue in theory and practice across the global community.

Indeed, there are two main opposing schools of thought on this topic, the first being that where there is no express choice of law, a forum selection agreement (encompassing a jurisdiction or arbitration agreement) should be decisive or a strong presumption in implying the choice of law (see for example, M/S Bremen v Zapata Off-Shore Co.). This enhances coherence between the forum and lex fori. Moreover, on pragmatic grounds, it is easier and less expensive for the forum to apply its own law correctly.

Conversely, the opposing school of thought argues against a forum selection agreement being decisive or a strong presumption to imply the choice of law. For example, some courts in the United States have even gone so far as holding that “because the selection of a forum does not operate as a choice of law clause, the Court will not imply a choice of law provision where the parties did not expressly agree to it.” This is on the basis that parties who choose a forum should also choose the law. Failure to choose a law to match a forum selection agreement will negate an implied choice of law; it could either mean that the parties were ignorant of the choice of law or did not intend to apply the law of the chosen forum. Therefore, according to a strict standard, this school of thought requires the corroboration of other indicators to imply a choice of law. In essence, where an express choice of law is absent, the choice of forum alone cannot imply a choice of law, because this wrongly conflates jurisdiction with choice of law.

There are many scholarly works that have commented on this issue, but few have devoted their attention to the topic. Maxi Scherer (2011) and Jan Neels (2016) are the only scholars I have found to dedicate their research to this area. Scherer’s focus is exclusively based on the European Union, whilst Neels is mainly concerned with the approach of the Indian courts in this regard. Nevertheless, other scholars have discussed the matter in great depth, even though it has not been the main thrust of their research, for example, Manuel Penades Fons (2012), Peter Mankowski (2017), Richard Plender &, Michael Wilderspin, (2023) Michael McParland (2015), and Garth Bouwers (2021).

However, what is lacking in the previous scholarly works is the commitment to provide clear guidance on global uniform criteria for this issue. Professor Jan Neels who was the drafter of the doctrine of implied choice of law in the Hague Principles on Choice of Law in International Commercial Contracts also notes that: “Most international, supranational, and regional conflicts instruments provide no guidance in respect of the link between choice of forum or arbitral tribunal and tacit choice of law.” My article explicitly departs from a recent study by Garth Bouwers, who proposes a ‘case-by-case basis, avoiding fixed criteria’ in the use of a forum selection agreement as an indicator to imply a choice of law. The reason for advancing a clear guide to global uniform criteria is that it should contribute to greater certainty, predictability, and uniformity in this field of law.

The methodology employed, namely, a global comparative perspective, is one that presents all relevant international, regional, and supranational instruments, and selected legal systems in Africa, Asia, Australasia, Europe, the Middle East, and North and South America. The legal systems compared encompass those in the Global North and Global South, including common law, civil law, and mixed legal systems. I consider Symeon Symeonides to be the intellectual godfather of this form of global comparative perspective on choice of law. A decade or so ago, he employed this methodology in his seminal work, which covered around 100 codifications on choice of law. Daniel Girsberger, Thomas Graziano, and Jan Neels also utilized this methodology in an edited work on choice of law in international commercial contracts. Finally, Garth Bouwers applied this methodology in his recent study on tacit choice of law in international contracts.

Based on such a global comparative perspective, my article’s core proposal is that an exclusive forum selection agreement should be a key factor in implying the choice of law. However, except in cases where the forum is chosen on a neutral basis, there should be a general requirement of corroboration with at least one other factor of significance. My proposal is therefore a compromise between the school of thought that insists on the corroboration of a plurality of factors as a requirement, and the other, which rejects this requirement. Therefore, it is a proposal that should not be difficult to sell as a global approach.

However, debate might be unnecessary if parties make an express choice of law in their international contracts. Nevertheless, the reality is that while choice of forum agreements are popular worldwide, agreements on an express choice of law are not always entered into. Therefore, this present study is one that should remain pertinent to the theory and practice of international commercial dispute resolution.