Read (and Draft) That Forum Selection Clause Carefully!

The Massachusetts Appeals Court has ruled that a party to a business contract could file suit in Massachusetts even though the contract specified that “jurisdiction shall vest in the State of Illinois.” The Appeals Court held that the “jurisdiction shall vest” language is merely permissive and does not require that suit between the contracting parties be brought in Illinois. Boland v. George S. May International Company, No. 11-P-1300, slip op. (Mass.App.Ct. June 7, 2012).

The clause was contained in a contract between a Framingham, Massachusetts-based fitness club, and a management services company located in Illinois. In analyzing the forum selection language in the agreement, the Appeals Court distinguished the clause from other clauses that the Court has ruled do require the parties to litigate only in the specified forum. Those clauses speak not only of conferring jurisdiction on a given forum, but typically also contain choice of law provisions and a statement declaring that the specified jurisdiction is the exclusive site for the parties to conduct their dispute. According to the Appeals Court “[t]he present case presents a different type of forum selection clause–one which confers jurisdiction on a forum, but omits any requirement of exclusive jurisdiction.”

The Appeals Court in the Boland case also offered an alternative rationale for concluding that the phrase “jurisdiction shall vest in the State of Illinois” is merely permissive: the Court found that the statement is ambiguous and should therefore be construed against the Illinois based company that drafted it. The Court stated that the clause is ambiguous because it “permits a view of jurisdiction as either exclusive in Illinois or as permissibly concurrent in both Illinois and Massachusetts.”

So, businesses and attorneys take care! While, at first blush, the phrase “jurisdiction shall vest” in a particular state would appear to be sufficient to lock the parties into a particular state’s court system, it isn’t. Anyone relying on such permissive, ambiguous, forum selection clauses may find themselves or their clients unnecessarily fighting lawsuits far from home.

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