Does Mississippi need a statute voiding forum selection clauses?

Recently the United States Supreme Court took a close look at the enforceability of forum selection clauses in Atlantic Marine Construction Co. v. U.S. District Court for the Western District of Texas.  In that decision, the Supreme Court found that such forum selection clauses, when properly drafted, are enforceable.  Only where there is an overwhelmingly strong public interest should a venue selection provision be ignored.

Notwithstanding the Supreme Court’s decision, there are some twenty-four (24) states that have enacted statutes which render such forum selection clauses void.  Whether these statutes can withstand constitutional scrutiny was not addressed by the Supreme Court in Atlantic Marine.  An example is Arizona’s statute that provides as follows:

A. The following are against this state's public policy and are void and unenforceable:

1. A provision, covenant, clause or understanding in, collateral to or affecting a construction contract that makes the contract subject to the laws of another state or that requires any litigation arising from the contract to be conducted in another state.

2. A provision, covenant, clause or understanding in, collateral to or affecting a construction contract stating that a party to the contract cannot suspend performance under the contract or terminate the contract if another party to the contract fails to make prompt payments under the contract pursuant to section 32-1129, 32-1129.01 or 32-1129.02.

B. Any mediation, arbitration or other dispute resolution proceeding arising from a construction contract for work performed in this state shall be conducted in this state.

A.R.S. §32-32-1129.05.

It may be time for Mississippi to consider adopting a similar statute to protect resident contractors from having to pursue remedies against a non-resident contractor in a foreign jurisdiction and also being subjected to that state’s laws.

If you have any thoughts or comments on this issue, please contact Lee Nations, Executive Director for Associated General Contractors of Mississippi at (601) 9811-1144 or at lee@msagc.com.

Mississippi's "Preference" Statute--It is really quite simple.

Mississippi has two "preference" statutes. The first one is found under the statutory scheme for the Board of Public Contractors at Miss. Code Ann. §31-3-21(3) (Rev.2010). The second one is found under the Mississippi statutes dealing with Public Purchases at Miss. Code Ann. §31-7-47 (Supp. 2012). The purpose of these statutes is to ensure that Mississippi contractors are given the benefit of any "preference" afforded by a non-resident contractor bidding in Mississippi. In other words, in deciding the lowest and best bidder, the governing authority in Mississippi would apply the percentage increase to each out-of-state bidder’s price which is equal to the percentage of "preference" given to a non-resident contractor in the bidder’s home state.

For example, assume a Mississippi resident contractor bids $100 while a non-resident contractor bids $95. On its face, the non-resident contractor would appear to be the low bidder. However, if the non-resident contractor’s state grants a ten percent (10%) preference to its own resident contractors, then Mississippi’s governing authority must add ten percent (10%) to the non-resident contractor’s price when evaluating the bid. This results in the non-resident contractor’s bid being adjusted to $104.50 ($95 x .10 = $9.5 + $95 = $104.50). Therefore, the Mississippi contractor’s bid would be the lowest and best bid and awarded the contract. See generally, Refrigeration Sales Co., Inc. v. State of Mississippi, 645 So. 2d 1351 (Miss. 1994)(interpreting the application of Mississippi’s "preference" statute to bid of non-resident contractor from New York).

Despite the simple and straight forward nature of these "preference" statutes, the Mississippi Attorney General has opined that if a low bid from a non-resident contractor is "equal or substantially equal" to that of the second low bidder that is a Mississippi contractor, these statues require the governing agency to "prefer" the Mississippi resident contractor over the low non-resident bidder, even though the words "equal or substantially equal" do not appear in either statute.Miss. Attorney General Opinion No. 2007-00452, addressed to Malcolm Jones (September 4, 2007). Until the Mississippi Supreme Court or the Court of Appeals addresses the Mississippi Attorney General’s interpretation, the actual application of these statutes to the bidding process will be more complicated than the statutes require.