The Many Uses of the Forum Selection Clause

Image by Hans from Pixabay

The forum selection clause is the Swiss Army Knife of transnational litigation. Among other things, it may be invoked to:

1. obtain personal jurisdiction over a defendant who otherwise lacks any connection to the chosen jurisdiction;
2. dismiss a case filed in a jurisdiction other than the one named in the clause;
3. defeat an attempt to enforce a judgment rendered by a foreign court;
4. justify the issuance of an anti-enforcement injunction directing other courts not to enforce an existing judgment; and
5. validate the issuance of an anti-suit injunction directing foreign courts not to hear a suit in the first instance.

A recent case decided by the U.S. District Court for the Northern District of California, CSP Logistics v. K18, Inc., fits neatly into the fifth category.

The plaintiff, CSP Logistics (“CSP”), a company based in France, filed a lawsuit against K18, Inc. (“K18”), a company based in California, alleging breach of contract. The suit was filed in federal court in California pursuant to an exclusive forum selection clause choosing courts in California. Two weeks after the California suit was filed, CSP filed a second lawsuit against K18 in France. K18 asked the federal court to issue an anti-suit injunction to enjoin CSP from continuing its litigation in France.

This request was granted. It is clear from the opinion by Judge Haywood S. Gilliam, Jr. that the decision to issue the injunction was made easy by the exclusive California forum selection clause. The court observed that an “anti-suit injunction [was] necessary to both uphold the federal court system’s commitment to forum selection clause enforcement and to enforce the parties’ forum selection clause in this matter.” It also stated that “where two parties have made a prior contractual commitment to litigate disputes in a particular forum, upholding that commitment by enjoining litigation in some other forum is unlikely to implicate comity concerns.”

When I teach Contracts, I always make a point of telling my students that a well-drafted agreement can save a lot of money in future litigation. CSP Logistics v. K18, Inc. is a case in point. The existence of the California forum selection clause made it possible for K18 to avoid having to travel to France, hire French lawyers, and fight this legal battle on two continents. Instead, it will be able to litigate the case in exactly one forum—the federal courthouse twelve miles from its corporate headquarters.