Microsoft Contract Day 2025!
June 12, 2025
Image by Tawanda Razika from Pixabay
Two years ago today, I authored a post titled “Microsoft’s Dispute Resolution Provisions Are a Mess.” I argued that the “Jurisdiction and Governing Law” language in the form purchase order used by Microsoft and its subsidiaries in 109 countries around the world was “incoherent.” My goal in writing the post was to inspire/shame Microsoft – a company with a $3+ trillion market cap that employs hundreds of lawyers worldwide – to patch the provision.
One year ago today, I authored a post titled “Microsoft’s Dispute Resolution Provisions Are (Still) a Mess.” I pointed out that nothing had changed since my initial post. I also proposed a new tradition at TLB called “Microsoft Contract Day.” I promised that every year on June 12 (or thereabouts), I would post an update on whether Microsoft had updated the language in its standard form purchase order. If the relevant language had been updated, I would report on the changes. If it had not been updated, I would rerun the original post with additional commentary.
Today, I write to provide an update on the status of this particular “Jurisdiction and Governing Law” clause, which may be viewed here. The good news is that there have been some changes. The bad news is that the clause is still a mess in many respects.
The Old and the New
The 2023 version of the “Jurisdiction and Governing Law” language is pasted below. I have added the bolded numbers in brackets to delineate its different parts.
[1] For Goods, Deliverables, Services and Cloud Services provided to Microsoft in the United States, these PO Terms are governed by Washington State Law (disregarding conflicts of law principles), and the parties consent to exclusive jurisdiction and venue in the state and federal courts in King County, Washington. All Cloud Services are deemed provided in the United States if any access or use of Cloud Services by Microsoft occurs in the United States. [2] For all other Goods, Services and Cloud Services provided to Microsoft, the Laws, jurisdiction and venue of the country where Microsoft (i.e., the entity other than Supplier who is the contracting entity to these PO Terms) is incorporated or otherwise formed will govern these PO Terms. [3] Neither party will claim lack of personal jurisdiction or forum non conveniens in these courts. [4] In any action or suit related to these PO Terms, the prevailing party is entitled to recover its costs including reasonable attorneys’ fees.
The 2025 version of the “Jurisdiction and Governing Law” language is pasted below. I have bolded the parts of the clause that are materially different from the earlier version.
[1] Where Goods, Services, Deliverables, or Cloud Services are provided to Microsoft in the United States, these PO Terms are governed by Washington State Law (disregarding conflicts of law principles), and the parties consent to exclusive jurisdiction and venue in the state and federal courts in King County, Washington. All Cloud Services are deemed provided in the United States if any access or use of Cloud Services by Microsoft occurs in the United States. [2] In all other instances, these PO Terms are governed by the Laws of the country where Microsoft (i.e., the entity other than Supplier who is the contracting entity to these PO Terms) is incorporated or otherwise formed and the parties consent to exclusive jurisdiction and venue in that country. [3] Neither party will claim lack of personal jurisdiction or forum non conveniens in the courts agreed above. [4] In any action or suit related to these PO Terms, the prevailing party is entitled to recover its costs including reasonable attorneys’ fees.
The new version of the provision patches one major problem that I flagged in my original post. Unfortunately, it does not address several others.
Making Improvements
In my original post, I argued that the second clause in the 2023 version of the provision was not a forum selection clause because neither a “venue” nor a “jurisdiction” can “govern” the terms of an agreement. Since the sentence did not select a court, I argued, it was not a forum selection clause.
The 2025 version of the provision addresses this problem by breaking the second clause into two parts. The first is a choice-of-law clause that selects the laws of the country where the Microsoft entity is located. The second is a forum selection clause which states that the courts of that same country shall have exclusive jurisdiction. The new clause is much cleaner and clearer than the prior version.
Microsoft also amended the language at the end of the third clause to make clear that the personal jurisdiction waiver and the forum non conveniens waiver apply to both the courts in the first clause and the second clause. This clarifying amendment is also praiseworthy.
Ignoring Everything Else
The 2025 version of the provision does not address any of the other issues flagged in my prior posts. The list of these issues includes:
- Neither of the choice-of-law clauses contains language clearly stating that they apply to tort and statutory claims.
- Neither of the forum selection clauses contains language clearly stating that they apply to tort and statutory claims.
- The fee-shifting provision does contain language stating that it shall apply to tort and statutory claims “related to” the contract, thereby making it unlikely that any court will ever construe the choice-of-law or forum selection clauses to have a similarly broad scope, even though Microsoft would likely benefit from such a construction.
- Neither of the choice-of-law clauses excludes the U.N. Convention on Contracts for the Sale of Goods, the outcome preferred by U.S. companies in the overwhelming majority of cases.
All in all, while the new provision represents an improvement over the old, it still exhibits a number of weaknesses that remain unaddressed two years after I first raised them.
Variations
The situation on the ground is, however, arguably even more complex. This is because Microsoft uses different language than the 2025 version in thirteen countries. These country-by-country variations in text are discussed below.
Continued Use of the 2023 Version
The 2023 version of the “Jurisdiction and Governing Law” language—including the gibberish second clause—continues to be used in ten countries where Microsoft and its affiliates do business: Canada, China, Ecuador, France, Iceland, Indonesia, Italy, Japan, Poland, and Taiwan. This is inexplicable. Microsoft has developed a patch that specifically addresses problems in the 2023 version of the provision. It has implemented the patch in more than ninety countries. Why would it choose to retain the old, inferior version of the provisions in its dealings with the ten nations listed above? There is no obvious answer to this question.
Myanmar
Reading the clause for Myanmar is like watching a traffic accident unfold in real time. It appears that Microsoft took an arbitration clause calling for the resolution of all disputes in Singapore [A] and then grafted on the litigation terms set forth in the 2025 version of its standard clause [B]. The graft was, moreover, poorly executed. The drafter accidentally included the header of the patched language in the clause and placed it in the middle of a sentence, as shown in the bolded text below.
[A] These PO Terms are subject to and will be governed by and construed under the laws of Singapore. The parties agree that any dispute arising out of or in connection with these PO Terms (including any Supplemental Agreement and any Statement of Services), including any question as regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration in Singapore in accordance with the Arbitration Rules of the Singapore International Arbitration Centre (“SIAC”), which rules are deemed to be incorporated by reference into this section. The Tribunal shall consist of one arbitrator to be appointed by the Chairman of SIAC. The language of the arbitration will be English and arbitration proceedings shall be conducted in English. The decision of the arbitrator will be final, binding and incontestable and may be used as a basis for judgment thereon in Myanmar, or elsewhere. To the fullest extent permitted by applicable law, the parties waive their right to any form of appeal or other similar recourse to a court of law. These choices of jurisdiction, dispute resolution method and venue stated above do not prevent either party from seeking injunctive relief for: (i) any violation of intellectual property rights; (ii) any breach of confidentiality obligations; or (iii) any enforcement or recognition of any award or order in any appropriate jurisdiction. [B] Where Goods, Microsoft Purchase Order Terms and Conditions (Myanmar) (February 2025) Services, Deliverables, or Cloud Services are provided to Microsoft in the United States, these PO Terms are governed by Washington State Law (disregarding conflicts of law principles), and the parties consent to exclusive jurisdiction and venue in the state and federal courts in King County, Washington. All Cloud Services are deemed provided in the United States if any access or use of Cloud Services by Microsoft occurs in the United States. In all other instances, these PO Terms are governed by the Laws of the country where Microsoft (i.e., the entity other than Supplier who is the contracting entity to these PO Terms) is incorporated or otherwise formed and the parties consent to exclusive jurisdiction and venue in that country. Neither party will claim lack of personal jurisdiction or forum non conveniens in the courts agreed above. In any action or suit related to these PO Terms, the prevailing party is entitled to recover its costs including reasonable attorneys’ fees.
It goes without saying that a clause that simultaneously calls for the arbitration of all disputes in one location and the litigation of all disputes in a different location is not a model to emulate. It also goes without saying that memo headings should not appear in contract clauses.
Puerto Rico
The language utilized in Puerto Rico exhibits similar grafting problems. The 2023 version of the provision utilized in Puerto Rico was unusual in that it called for the application of Puerto Rican law—not the law of Washington, where Microsoft is headquartered—to disputes arising within the United States. The current version of the Puerto Rico calls for the agreement to be governed by both the law of Puerto Rico (i) and the law of Washington (ii):
[i] These PO Terms are subject to and shall be governed by and construed in accordance with the laws of the Commonwealth of Puerto Rico[.] [ii] Where Goods, Services, Deliverables, or Cloud Services are provided to Microsoft in the United States, these PO Terms are governed by Washington State Law (disregarding conflicts of law principles), and the parties consent to exclusive jurisdiction and venue in the state and federal courts in King County, Washington
Again, a provision that simultaneously selects the law of two different governing jurisdictions is not a model to emulate.
South Africa
The language utilized in South Africa is similarly contradictory. Most of the provision faithfully tracks the 2025 version [Y]. The clause begins, however, with two sentences that are unique to South Africa [X]:
[X] For Goods and Services provided to Microsoft in South Africa, these PO Terms are subject to and will be governed by and construed in accordance with the laws of South Africa. For all other Goods and Services provided to Microsoft, the laws, jurisdiction and venue of Microsoft’s physical location will govern these PO Terms. Where Goods, Services, Deliverables, or Cloud Services are provided to Microsoft in the United States, these PO Terms are governed by Washington State Law (disregarding conflicts of law principles), and the parties consent to exclusive jurisdiction and venue in the state and federal courts in King County, Washington. All Cloud Services are deemed provided in the United States if any access or use of Cloud Services by Microsoft occurs in the United States. [Y] In all other instances, these PO Terms are governed by the Laws of the country where Microsoft (i.e., the entity other than Supplier who is the contracting entity to these PO Terms) is incorporated or otherwise formed and the parties consent to exclusive jurisdiction and venue in that country. Neither party will claim lack of personal jurisdiction or forum non conveniens in the courts agreed above. In any action or suit related to these PO Terms, the prevailing party is entitled to recover its costs including reasonable attorneys’ fees.
The problem with this provision is that it states two different choice-of-law rules. The first bolded sentence borrows most of the gibberish language in the 2023 version but introduces a “physical location” rule that is unique to South Africa. The second bolded sentence states that the choice-of-law inquiry should focus on the place where the entity is “incorporate or otherwise formed.” This provision, like the ones discussed above, is not a model for other companies.
Conclusion
The standard “Jurisdiction and Governing Law” provision in Microsoft’s purchase orders is better drafted today than it was a year ago. Viewed from Microsoft’s perspective, this is a good thing. As the foregoing discussion reveals, however, this provision is still far from perfect. It continues to suffer from inexplicable errors and omissions, inconsistent application across countries, and bizarre cut-and-paste errors that simply should not appear in standard contracts drafted by a company with a market capitalization of $3 trillion.
All of these problems can, happily, be easily fixed. Microsoft employs many lawyers. One cannot help but wonder, then, how and why this provision continues to exhibit so many problems more than two years after they were brought to the company’s attention. With any luck, Microsoft Contract Day 2026 will see a change for the better.