Venue Clause

Written by: Patrick Shaunessy

16 minute read

What is a venue clause?

A venue clause (sometimes referred to as a forum clause, jurisdiction clause or choice of venue/forum/jurisdiction clause) is a contractual provision that establishes what courts have jurisdiction over disputes between the parties. Rather than waiting for a dispute to arise and then fighting over where to litigate, which could add to the cost and strain of the dispute itself, the venue clause allows parties to preemptively agree on a forum for litigation purposes. The venue specified can be as broad as the courts of an entire country (see example 6 below) or as narrow as courts in a particular county or municipality (see examples 4 and 15 below). Typically, the chosen venue will have at least some connection to one or both of the parties (e.g., an office or other base of operations in the relevant jurisdiction). Venue clauses can be found in almost every kind of contract.

Why does the venue clause matter?

On the one hand, as mentioned above, venue clauses can help make the litigation process more efficient by establishing which courts have jurisdiction before any dispute between the parties arises. However, because the clause typically specifies the courts of only one jurisdiction as the venue, there may be tradeoffs in making this choice, and it may benefit one party more than the other. The venue selected for a given contract depends on a number of factors, including the parties’ respective jurisdiction(s) of incorporation or residence, the location(s) where they have business operations, the purpose of the contract, and their relative bargaining power. Where there is a significant imbalance in bargaining power, the party in the inferior position may have little say in choosing the venue. Furthermore, because it is so pervasive, parties may view the venue clause as a “boilerplate” term and therefore may not pay much attention to it when negotiating the contract. Only after a dispute arises might a party realize that it has agreed to a venue that is not in its best interests. Challenging the choice of venue at that time adds to the cost of the dispute and, depending on the wording of the clause, it may have limited chance of success. By developing an awareness of the details of venue clauses in their contracts, businesses can better anticipate potential issues with them and take appropriate action to mitigate the risks they present in a timely manner.

How do you review the venue clause in contracts?

Venue clauses are not always easy to find. As the examples below illustrate, they can be labelled in a variety of ways; and in some cases, they may be buried in the middle of dense sections, requiring careful review to spot.

After locating all the venue language in each agreement, key things to focus on when reviewing these provisions include:

  1. The venue selected. As mentioned above, these clauses can range in specificity when it comes to designating the venue. A clause like example 2 below, which specifies the “courts of England” as having jurisdiction over disputes between the parties, grounds the venue in England but still allows some flexibility as to which particular court in England may be best for a given dispute. Similarly, though more regionally focused, examples 8 and 14 permit the parties to choose a court within the provinces of British Columbia and Ontario, respectively, which may provide a degree of convenience in terms of, say, the municipality in which the court is located. On the other hand, a more specific clause like example 1 below, which designates the “courts of the State of Florida in Palm Beach County” for state matters and the “court of the United States, Southern District of Florida” for federal matters, really limits the parties’ options.
  2. Whether the clause is mandatory. Words like “exclusive”, “shall”, “irrevocably” and “unconditionally” all generally indicate that the clause is meant to be mandatory; whereas, words like “non-exclusive” or “may” indicate the opposite. A mandatory clause may be more difficult to challenge once a dispute has escalated to litigation. Note, however, that, even in cases where a venue clause is mandatory, parties may have the right by law to pursue certain disputes in a court other than one in the designated venue. Clauses like example 10 below may contain language that makes this clear (see the second bold section in that example).
  3. Agreement to submit. Somewhat related to the question of whether or not a given venue clause is mandatory is the parties’ agreement to submit (or, alternatively, “attorn”) to the chosen venue. Where this language is included in a venue clause, it serves as further evidence of each party’s intention to have the courts of the designated jurisdiction preside over disputes relating to their agreement. This can be useful for a party seeking to enforce the terms of the venue clause.
  4. Waivers. The clause may also try to neutralize future challenges by including a waiver whereby each party forgoes its right to object to the chosen forum or to any proceeding commenced there - e.g., through the doctrine of forum non conveniens in common law jurisdictions (see, for instance, examples 1 and 3 below). When encountering waiver language in a venue clause, it is important to consider the circumstances of the parties and the particular contract to evaluate whether there may be any issues with the enforceability of the waiver.

As with the review of any contractual provision, it’s also important to be aware of other provisions that may affect the interpretation of venue clauses. The governing law clause, for example, establishes which jurisdiction’s laws apply to the agreement. Often the venue clause and the governing law clause will align on jurisdiction, but this isn’t always the case. Where they differ, parties may want to give additional thought to the implications of this for a given dispute.

Software that uses AI to identify and extract venue clauses (as well as other terms that may affect their interpretation) can accelerate the work of finding these provisions and enable a more comprehensive review than can otherwise be done manually.

Examples of the venue clause

Below are some examples of venue clauses from different kinds of agreements. While these examples do not necessarily cover the full range of venue clauses one may encounter, they are meant to illustrate the degree to which these provisions can vary from contract to contract. Where an example includes broader contextual language, the venue clause is highlighted in bold.

Example 1: From an Exclusive Distribution Agreement

JURISDICTION AND VENUE

24.1 Each of the parties irrevocably and unconditionally (A) agrees that any suit, action or legal proceeding arising out of or relating to this agreement will be brought in the courts of the State of Florida in Palm Beach County or the court of the United States, Southern District of Florida; (B) submits and consents to the exclusive jurisdiction of each court in any suit, action or proceeding; (C) waives any objection which it may have to the laying of venue of any suit, action or proceeding in any of the courts; and (D) agrees that service of process or any other court paper may be effected on such party by mail in accordance with the provisions of Section 21 hereof, or in such other manner as may be provided under applicable Florida State laws or court rules.

Example 2: From an Intercompany Loan Agreement

JURISDICTION

The Parties to this Agreement irrevocably agree that the courts of England shall have non-exclusive jurisdiction to settle any disputes, which may arise out of, or in connection with this Agreement and that accordingly any proceedings may be brought in such courts.

Example 3: From a Supply Agreement

7.16 Submission to Jurisdiction. WITHOUT LIMITING THE PARTIES’ AGREEMENT TO SUBMIT ANY AND ALL DISPUTES TO MEDIATION AND ARBITRATION AS HEREIN PROVIDED, IF, NOTWITHSTANDING SAID SECTION, ANY PARTY SHALL HAVE THE RIGHT TO SEEK RECOURSE TO A COURT WITH RESPECT TO ANY DISPUTE ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS AGREEMENT, WHETHER IN TORT OR CONTRACT OR AT LAW OR IN EQUITY, THEN ANY ACTION OR PROCEEDING IN RESPECT OF ANY SUCH DISPUTE SHALL BE BROUGHT EXCLUSIVELY IN ANY CANADIAN COURT LOCATED IN THE PROVINCE OF ONTARIO AND WITH RESPECT TO ANY SUCH ACTION EACH PARTY (I) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURTS FOR SUCH PURPOSES, (II) WAIVES ANY OBJECTION TO LAYING VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE CHOSEN COURTS, AND (III) WAIVES ANY OBJECTION THAT THE CHOSEN COURTS ARE AN INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY HERETO. EACH PARTY AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE AND MAY BE ENFORCED BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW OR AT EQUITY. EACH PARTY ALSO AGREES NOT TO BRING ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY OTHER COURT.

Example 4: From a Warrant Purchase Agreement

(f) Governing Law; Jurisdiction. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PERSON AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THE PURCHASE AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. EACH OF THE COMPANY AND THE HOLDER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.

Example 5: From a Trademark License Agreement

Choice of Law; Forum. This Agreement, and all of its provisions, shall be governed by and construed in accordance with the laws of the State of New York without reference to its conflict of law principles. Exclusive jurisdiction and venue for any dispute concerning this Agreement shall lie with the federal and state courts located in and serving New York, New York. The parties hereto irrevocably submit to the jurisdiction of such New York courts and hereby waive any objection based on venue or forum.

Example 6: From an Executive Service Agreement

Governing Law. This Agreement shall be governed and construed in all respects in accordance with the laws of England. Each of the parties hereto irrevocably submits to the non-exclusive jurisdiction of the English Courts.

Example 7: From a License Agreement

21.1 Proper Law

This agreement will be governed by the laws of the State of New South Wales. The parties agree to submit to the non-exclusive jurisdiction of the Courts of the State of New South Wales.

Example 8: From a Distribution Agreement

13.1 Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties hereto shall be governed by, the laws in force in the Province of British Columbia and the laws of Canada applicable therein. Each of the parties hereto irrevocably attorns to the jurisdiction of the Courts of the Province of British Columbia.

Example 9: From an Agreement and Plan of Merger

SECTION 9.07. JURISDICTION. Each party to this Agreement hereby irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement or any agreements or transactions contemplated hereby shall be brought exclusively in the United States District Court for the Southern District of New York and hereby expressly submits to the personal jurisdiction and venue of such courts for the purposes thereof and expressly waives any claim of improper venue and any claim that such courts are an inconvenient forum. Each party hereby irrevocably consents to the service of process of any of the aforementioned courts in any such suit, action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the address set forth or referred to in Section 9.01, such service to become effective 10 days after such mailing.

Example 10: From a Loan Agreement

Section 10.12 Governing Law; Venue; Service of Process. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas and the applicable laws of the United States of America. This Agreement has been entered into in Dallas County, Texas, and it shall be performable for all purposes in Dallas County, Texas. Any action or proceeding against any Loan Party under or in connection with any of the Loan Documents may be brought in any state or federal court in Dallas County, Texas. Each Loan Party hereby irrevocably (a) submits to the non-exclusive jurisdiction of such courts, and (b) waives any objection it may now or hereafter have as to the venue of any such action or proceeding brought in any such court or that any such court is an inconvenient forum. Each Loan Party agrees that service of process upon it may be made by certified or registered mail, return receipt requested, at its address specified or determined in accordance with the provisions of Section 10.11. Nothing herein or in any of the other Loan Documents shall affect the right of Lender to serve process in any other manner permitted by law or shall limit the right of Lender to bring any action or proceeding against any Loan Party or with respect to any of its property in courts in other jurisdictions. Any action or proceeding by any Loan Party against Lender shall be brought only in a court located in Dallas County, Texas.

Example 11: From a Customer Agreement

CONSENT TO JURISDICTION

Any litigation between Vendor and Customer relating to this Agreement or transactions hereunder shall take place in the Courts of the State of Illinois located in Cook County or in the United States District Court for the Northern District of Illinois, and the parties agree to submit to such exclusive jurisdiction. Customer consents to the service of process by the mailing to Customer of copies of such court tiling by certified mail to the address of Customer as it appears on the books and records of Vendor, such service to be effective ten days after mailing. Customer hereby waives irrevocably any immunity to which it might otherwise be entitled in any arbitration, action at law, suit in equity or any other proceeding arising out of or based on this Agreement or any transaction in connection herewith.

Example 12: From a License Agreement

GENERAL No waiver, negligence, relaxation, or delay by one party hereto in enforcing any of the terms and conditions of this Agreement, or the granting of time by one party to the other party, shall prejudice, affect, or restrict the rights and powers of the one party. This Agreement represents the full and complete agreement and understanding of the parties hereto, and supersedes and cancels any previous agreements or understandings. This Agreement shall not hereafter be changed or modified in any respect except by a written memorandum embodying such changes or modifications, duly stated, signed by both parties hereto, and bearing distinct reference to this Agreement.The headings to the provisions of this Agreement are to facilitate reference only, and do not form a part of this Agreement, and therefore shall not in any way affect the interpretation of the provisions in this Agreement. If any provision of this Agreement is held illegal, invalid, or unenforceable, the illegal, invalid, or unenforceable provision shall be null and void and shall be deemed deleted from this Agreement, and all the remaining provisions of this Agreement shall remain in full force and effect. This Agreement shall be governed and construed according to the laws of the state of Indiana, excluding its choice of law provisions. All proceedings arising hereunder shall be exclusively brought and exclusively maintained in state or federal courts located in Indiana, and the parties consent to jurisdiction and venue therein and hereby waive any right to object to jurisdiction or venue. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same document as if all parties had executed a single original document. This Agreement may be executed by facsimile copy and each signature thereto shall be and constitute an original signature, again as if all parties had executed a single original document.

Example 13: From an Agreement and Plan of Merger

(b) Each of the Parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Court of Chancery of the State of Delaware or, if under applicable Law, exclusive jurisdiction over such matters is vested in the Federal courts, any Federal court located in the State of Delaware, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the agreements delivered in connection herewith or the transactions contemplated hereby or thereby or for recognition or enforcement of any judgment relating thereto, and each of the Parties hereby irrevocably and unconditionally (i) agrees not to commence any such action or proceeding except in such courts, (ii) agrees that any claim in respect of any such action or proceeding may be heard and determined in such Court of Chancery or, to the extent required by Law, in such Federal court, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action or proceeding in any such court, and (iv) waives, to the fullest extent permitted by Law, (A) any claim that such Party is not personally subject to the jurisdiction of any such court, (B) any claim that such Party and such Party’s property is immune from any legal process issued by any such court and (C) the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. Each of the Parties agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each Party irrevocably consents to service of process in the manner provided for notices in Section 9.7. Nothing in this Agreement will affect the right of any Party to serve process in any other manner permitted by Law.

Example 14: From a Confidentiality Agreement

Jurisdiction. Any dispute as to the interpretation or rights of either Party under this Agreement. including a breach of this Agreement, will be submitted to the courts of the Province of Ontario, and the Parties hereby irrevocably attorn to the exclusive jurisdiction of the courts of the Province of Ontario.

Example 15: From a License and Distribution Agreement

c. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the Commonwealth of Virginia and Company consents to the jurisdiction and venue of the courts sitting in Fairfax County, Virginia. Company waives all defenses of lack of personal jurisdiction and forum non conveniens. Process may be served on either Party in the manner authorized by applicable law or court rule.