U.S. Supreme Court

SCOTUS to consider whether federal court is bound by contract's forum-selection clause

The U.S. Supreme Court has agreed to decide whether federal courts are generally bound to enforce contractual agreements on the jurisdiction to be used for the resolution of disputes.

The court granted cert on Monday, report the National Law Journal and SCOTUSblog. According to SCOTUSblog, the case “will give the justices an opportunity to sort out the meaning of two prior rulings that seem to run counter to each other on federal courts’ reaction to forum-selection causes in business contracts.”

The U.S. Chamber of Commerce and the Texas Civil Justice League had filed amicus briefs urging the court to accept the case, according to the NLJ. They sought reversal of a ruling by the New Orleans-based 5th U.S. Circuit Court of Appeals that refused to enforce a forum-selection clause.

The 5th Circuit cited a 1988 decision, Stewart Organization Inc. v. Ricoh Corp. The decision held that federal law governs a motion to transfer to another federal court. The 5th Circuit and some other courts interpret the ruling as holding that private parties can’t trump federal venue statues.

A majority of federal appeals courts take a different approach, citing a 1972 decision, M/S Bremen v. Zapata Off-Shore Co, according to the cert petition (PDF). That opinion found that forum-selection clauses should be enforced unless they are unreasonable or the product of overreaching.

The case is Atlantic Marine Construction Co. v. J-Crew Management Inc.

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