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.
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 email@example.com.