Out-of-state general contractors commonly require their subcontractors to sign forum-selection clauses, arguing that it’s more convenient and less expensive for them to resolve disputes in a jurisdiction of their choice.
For example, a general contractor headquartered in Alaska may place a forum-selection clause in a contract on a project in Texas stating that “Regardless of the site of the project, the laws of the State of Alaska shall govern in the interpretation of any contract-related issues, and any hearings or dispute resolution meetings shall be held in the State of Alaska.”
Such clauses may create an undue hardship for the subcontractor on such a project. The subcontractor may have to comply with laws and regulations with which it is not familiar and be held accountable for failure to comply; the subcontractor may have to bear the expense of travel and litigation in a distant location. Further, the subcontractor may not be able to access witnesses or provide other evidence to support its position in a dispute.
Ultimately, the additional burdens of a distant forum can often be prohibitive and effectively deprive a subcontractor of its day in court and/or leverage it to heavily discount, if not abandon, even the most worthy of claims.
Many states view forum-selection clauses as against public policy and make them “void and unenforceable.” The Foundation of the American Subcontractors Association has published a comprehensive manual, “Anti-Forum Selection Clauses in the 50 States,” to help subcontractors understand how forum-selection clauses are treated in the 50 states and the District of Columbia.
The ASA-member law firm and ASA general counsel, Kegler, Brown, Hill and Ritter, Columbus, Ohio, prepared the manual, which is available under the “Contracts & Project Management” section in the members-only area of the ASA Web site at no cost to ASA members. To learn more about becoming a member of ASA, visit the Membership section of the ASA website.