SDNY Enforces Swiss Forum Selection Clause

Image by ChatGPT

The U.S. Court of Appeals for the Second Circuit sees a lot of cases involving forum selection clauses. Perhaps as a result, that court took the time to articulate a comprehensive, four-step framework for determining how and when these provisions should be given effect in 2014.  In this post, I first discuss a recent case in the SDNY where the court applied this framework to a Swiss forum selection clause. I then urge other U.S. circuit courts of appeal to emulate the Second Circuit and collect all of the circuit rules relating to forum selection clauses in a single opinion.

Caviar Biotec Ltd v. La Prairie SA

Caviar Biotec Ltd (Caviar) is a company organized and headquartered in England. Its business focuses on the use of caviar in cosmetics and for medical research. La Prairie SA (La Prairie) is a company organized and headquartered in Switzerland. La Prairie, Inc. (LPI) is an affiliate of La Prairie organized under the laws of New Jersey with its principal place of business in New York.

In May 2021, Caviar entered into a non-disclosure agreement (NDA) with La Prairie. That agreement contained a Swiss choice-of-law clause and a Swiss forum selection clause:

This Agreement, all amendments and accompanying agreements shall be governed by and construed in all respects in accordance with the material laws of Switzerland excluding any conflict of law rules which may direct that the laws of another jurisdiction be applied. The exclusive jurisdiction shall have the competent courts at the domicile of La Prairie. Notwithstanding the exclusive jurisdiction agreed on, La Prairie may opt for any other available place of jurisdiction.

In early 2025, Caviar sued La Prairie and LPI in the U.S. District Court for the Southern District of New York (Judge Loretta A. Preska) for (1) trade secret misappropriation under federal law, (2) misappropriation of trade secrets and confidential information under New York state law, (3) unfair competition, (4) unjust enrichment, and (5) patent infringement. Both defendants invoked the Swiss forum selection clause to argue that the case should be dismissed for forum non conveniens. La Prairie also argued that the court lacked personal jurisdiction.

The Four-Step Framework

In the Second Circuit, the district courts use a four-step framework to determine whether a forum selection clause should be given effect. This framework, first articulated in Martinez v. Bloomberg LP, is set forth below.

Step One: Communication

The court must consider whether the clause was “reasonably communicated” to the party resisting enforcement. In Caviar Biotec, the court held that Caviar was “on notice of and consented to the forum selection provision.” In support of this conclusion, the court noted that Caviar’s chief executive had signed the contract and specifically initialed the page in the contract containing the clause.

Step Two: Exclusivity

The court must assess whether the clause is exclusive or non-exclusive. An exclusive clause selects the courts of the chosen jurisdiction to the exclusion of all others. A non-exclusive clause consents to jurisdiction and venue in the chosen court but does not foreclose the possibility of suing elsewhere. In this case, the court had little trouble concluding that the clause was exclusive because it stated that the courts in the place where La Prairie was domiciled—Switzerland—would have “exclusive jurisdiction” in any suit initiated by Caviar.

Step Three: Scope

The court must next review the language in the clause to determine whether it binds the relevant parties and applies to the claims asserted. In Caviar Biotec, the court found that the clause bound Caviar and La Prairie because they were parties to the agreement. It found that it bound LPI because it was “closely related” to the parties and the transaction. The court also found that the clause applied to the misappropriation of trade secrets claims because the purpose of the NDA was to preserve these secrets. Finally, the court found that the clause applied to the claims for unfair competition and unjust enrichment because the litigation of these claims would “inevitably require reference to rights and duties defined” in the NDA.

Step Four: Enforceability

Finally, the court must evaluate whether the resisting party has shown that enforcement would be unjust or unreasonable or contrary to public policy. Here, the court concluded that Caviar had failed to make this showing. It pointed out that Caviar, as a London-based company, is significantly closer to Switzerland than New York. It also found that Caviar’s actions in this case showed that it could litigate in Switzerland without significant hardship. In light of this analysis, the court concluded that the first four claims asserted by the plaintiff should be dismissed for forum non conveniens. The court ultimately dismissed the fifth claim—for patent infringement—because it concluded that the factual allegations were insufficient to support it.

A Model for Other Circuits

The four-step framework established by the Second Circuit in Martinez v. Bloomberg LP covers all the forum selection clause bases. It addresses communication, exclusivity, scope, and enforceability in a logical sequence that is easy for litigants and district courts to navigate. The standard tests deployed by the other federal circuits, by comparison, are similar in content but are fragmented across many different decisions. To illustrate, let us consider the case law in another circuit that sees a lot of forum selection clauses—the Eleventh Circuit.

In the Eleventh Circuit, the standard test for whether a forum selection clause should be given effect is as follows:

Forum selection clauses are presumptively valid and enforceable unless the plaintiff makes a strong showing that enforcement would be unfair or unreasonable under the circumstances. A plaintiff can defeat this presumption by showing that (1) the clause was induced by fraud or overreaching; (2) the plaintiff would be deprived of its day in court because of inconvenience or unfairness; (3) the chosen law would deprive the plaintiff of a remedy; or (4) enforcement of the clause would contravene public policy.

This test maps neatly onto the fourth step in the Second Circuit’s four-step framework. There is, however, nothing in this test that speaks to the other three steps. In the Eleventh Circuit, the legal rules relating to these other steps are addressed in other opinions. The issue of reasonable communication, for example, is addressed here. Exclusivity is addressed here and here. The issue of scope is addressed here.

It would be useful if a panel sitting in the Eleventh Circuit—or any other federal circuit that hears more than a token number of cases involving forum selection clauses—were to bring all of these rules together into a single, comprehensive opinion that would make it easier for litigants and district court judges to identify the relevant legal issues to address when dealing with forum selection clauses.