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Maritime Claims Could Be Impacted By This SCOTUS Decision

The Supreme Court of the United States issued a recent decision speaking to the options available to parties when their contract contains a forum selection clause. That's a clause included in an agreement specifying where a dispute must be resolved such as a court within a specific county or state. In the facts underlying the decision, one party to an agreement ignored the forum clause and filed suit against the other party in a locale different than what was specified. Naturally, anger (I speculate) ensued along with litigation seeking to enforce the original forum choice. The Supreme Court had to wrestle with the mechanics of treating the enforcement of such forum clauses which involved a lot of academic discussion of the Federal Rules of Civil Procedure.

What's the big deal, you ask? Well forum selection clauses are often inserted to seek the benefit of resolving disputes on your home turf which, among other things, allows you the benefit of economic efficiencies and the possible application of rules and procedures which you and your admiralty attorney understand. The bottom line is that this seemingly "boilerplate" type clause can have a big impact should a dispute arise making it a useful tool to include in your maritime agreements. And, like any tool, having your admiralty attorney lend a little preventative maintenance can make certain you're taking full advantage of its capabilities.

For instance, consideration should be given to making the forum selection clause mandatory and making certain the clause encompasses the federal court where, most likely, your maritime dispute will be resolved. That is, sometimes these clauses are pulled off the "shelf" and inserted into an agreement without much thought giving rise to such instances where there's no federal court in the specified forum! Your admiralty attorney should also take notice of more recent decisions which seem to underscore the importance of drafting broad clauses that will apply to as many possible claims as might arise.

On the flipside, understand that when you sign an agreement containing a forum selection clause, you may be disadvantaging your ability to pursue a meaningful remedy. In this Supreme Court decision, the Justices upheld the forum clause and in doing so sort of made it harder, I believe, to challenge the enforceability of these clauses in federal court.

The Supreme Court's decision provides instruction to parties on how they should handle a forum clause dispute. That is, where there was perhaps a choice of several options in dealing with these clauses, the Supreme Court's decision last month pointed the parties in a single direction and said "go."

You can read a copy of the decision by clicking HERE.

Underway and making way.

John Fulweiler

Categories: General Maritime Law

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