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Encyclopedia > Choice of law clause

A choice of law clause in a contract is one whereby the parties to that contract specify which law (i.e. the law of which state or nation) will govern disputes arising under the contract. Some states will not honor choice of law clauses as a matter of public policy, but most states now honor such clauses. A cause of action brought in any such state (called the 'forum state') must be resolved in accordance with the law of the state specified in the contract (the 'choice of law state'). A contract is any legally-enforceable promise or set of promises made by one party to another and, as such, reflects the policies represented by freedom of contract. ... Corruption Jurisprudence Philosophy of law Law (principle) List of legal abbreviations Legal code Intent Letter versus Spirit Natural Justice Natural law Religious law Witness intimidation Legal research External links Wikibooks Wikiversity has more about this subject: School of Law Look up law in Wiktionary, the free dictionary Law, Legal Definitions...


This may lead to problems, as courts of the forum state may be unfamiliar with the law of the choice of law state, and may apply the statute or case law of the choice of law incorrectly. Furthermore, disputes as to the scope of a choice of law provision are likely to arise when a lawsuit between parties to the contract is premised on a tort such as fraud or breach of fiduciary duty, instead of a breach of the contract itself. A statute is a formal, written law of a country or state, written and enacted by its legislative authority, perhaps to then be ratified by the highest executive in the government, and finally published. ... Case law - Wikipedia /**/ @import /skins/monobook/IE50Fixes. ... A lawsuit is a civil action brought before a court in which the party commencing the action, the plaintiff, seeks a legal remedy. ... This article needs to be cleaned up to conform to a higher standard of quality. ... A fiduciary is a person who occupies a position of trust in relation to someone else such that he is required to act for the latters benefit within the scope of that relationship. ...


The criticism has often been made by legal scholars that forum state judges faced with such a provision will employ various legal devices to escape from the strict requirements of the contract. Such devices purportedly allow judges to rely on their own sense of a fair outcome based on the facts of the case at hand, rather than strictly interpreting the terms of the contract, and the law of the choice of law state. While such rulings might lead to a fairer outcome, critics contend that they undermine the predictability of the legal system upon which contracts are based.


Escape devices include things such as:

  • Public policy: States will not apply a 'foreign' law that violates the deeply-held convictions of the forum state's legal system.
  • Renvoi: Courts may look for a provision in the law of the choice of law state that permits the court to use the law of the forum state; most states frown upon renvoi in a choice of law situation, insisting that the only law to be looked at is the substantive law of contracts, not the law governing choice of law. This problem can be avoided by fine-tuning the choice of law provision to make it expressly apply not to all laws of the choice of law state, but only to its "internal laws" or its "substantive laws," or by expressly excluding its choice of law provisions.
  • Procedural law: Classifying laws as procedural rules of the court rather than substantive laws of the state allows a court to use the law of the forum state. In some cases, this makes sense - after all, if the forum state requires legal documents to be printed in a twelve-point font, and the choice of law state requires the same documents to be printed in a fourteen-point font, it makes little sense to require the court to determine which font size should be used in a choice of law dispute. However, many contentious cases have centered on findings that things such as burdens of proof, admissibility of evidence, and statutes of limitations are procedural rather than substantive, because these things can change the outcome of a case.

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Petitioner and Bacchus opposed the motion, arguing the arbitration clause was unenforceable under the FAA both because it was a contract of adhesion and because it violated COGSA §3(8).
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