It is always interesting when a court holds that the laws of another country should apply, and such was the ruling in Albemarle Corp. v. AstraZeneca UK Ltd. After examining the contract between the two parties, the Court held that even though the contract’s forum selection clause would have been allowed under American law and the lawsuit could have been filed in South Carolina, the language of the forum clause required litigation to be brought in English court.
So what was this language that triggered this conclusion? According to the contract between the two parties, the forum selection clause read: “shall be subject to English Law and the jurisdiction of the English High Court.” And apparently, that is all it takes.
The Court’s analysis began by stating that when a federal court interprets a forum selection clause, federal law must be applied. As such, federal law provides “an agreement conferring jurisdiction in one forum will not exclude jurisdiction in another unless specific language says so.” And interestingly, the phrase “English High Court” is meant to be “mandatory and exclusive”; referring only to the courts of England.
But the analysis does not end there. The remaining question addressed by the Court is would it be unreasonable to enforce the clause this way? Generally, the only way to show unreasonableness in this context is to assert a public policy argument in favor of the forum the Court did not choose. While South Carolina attempted such an argument, the Court disagreed, maintaining that the rules specifying forum should be adhered to, and any other result would do nothing but hinder future international business transactions.
Thus, when entering into contracts, always read the terms carefully. Especially pay close attention to the details of what law applies and where the lawsuit can be tried. If you have questions, please feel free to contact us.