What is a forum selection clause?

A forum selection clause is a legal document that specifies in which court a dispute will be heard. It is typically included in contracts between two parties and is often used when parties from different jurisdictions enter into a contract. In North Carolina, a forum selection clause may limit which court a party can file a lawsuit in. For example, if two companies from different states enter into an agreement and a forum selection clause is used, the clause could require that all lawsuits arising from the agreement must be filed in the state where the company is located that drafted the agreement. This limits the ability of the other party to file a suit in a state more favorable to them. For international litigation law, a forum selection clause specifies which country will have jurisdiction in a dispute between parties from different countries. Depending on the specifics of the contract, one of the parties may need to comply with the laws of the country in which the court is located. In addition to specifying the legal jurisdiction, a forum selection clause can also dictate the law that will be applied to the dispute. For example, a clause could require that any disputes arising from the agreement be decided under the applicable law of a certain state or country, which is beneficial in situations where the parties have different interpretations of the contract. Finally, a forum selection clause can also specify whether the dispute will be decided through mediation or arbitration, as well as the process to be followed should a dispute arise. This alleviates much of the hassle and cost of potential litigation, as parties can avoid taking their dispute to court.

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