Choice-of-Law Analysis in Litigation

Posted on: July 16, 2012

A choice-of-law clause in a contract is a provision that designates the law that will govern any disputes between the contracting parties.  Including a choice-of-law clause in a contract where parties are located in different states, or even different countries, can minimize the uncertainty associated with any potential litigation with respect to the contract, and the substantive law governing the parties.

In Florida, a choice-of-law provision in a contract selecting the substantive law of another jurisdiction is presumed valid until it is proved invalid; the party who seeks to prove such a provision invalid bears the burden of proof.   Generally, Florida courts will enforce choice-of-law provisions unless the law of the chosen forum contravenes strong public policy. This rule is premised on the presumption that choice-of-law provisions are valid unless the party seeking to avoid enforcement of them sufficiently carries the burden of showing that the foreign law contravenes strong public policy of the forum jurisdiction.  The term “strong public policy” means that the public policy must be sufficiently important that it outweighs the policy protecting freedom of contract.  Thus, routine policy considerations are insufficient to invalidate choice-of-law provisions in a contract.  The countervailing public policy must be fundamental and strong enough to outweigh the policy protecting the expectations of contracting parties. 

Choice-of-law clauses can often be deemed applicable to tort claims; when determining whether or not a choice-of-law provision in a contract also governs such tort claims between the contracting parties, a court must examine the scope of the provision itself.  A choice-of-law provision that is narrow relates only to the agreement and will not encompass tort related claims.  For example, a provision providing that an agreement shall be governed and construed in accordance with the laws of a certain jurisdiction will be construed narrowly as it purports to govern only that agreement.  On the other hand, a choice-of-law provision that is broad in its wording can encompass certain tort claims.  For example, a clause indicating that all disputes arising out of or in connection with the agreement are to be construed in accordance with the laws of a certain jurisdiction would be deemed sufficiently broad to encompass tort claims between the contracting parties. 

Finally, it is important to note that a choice-of-law provision will not apply to actions that arose prior to the date of the agreement containing the choice-of-law provision. 

Choice-of-law analysis is crucial to any case where the contract contains a provision selecting the substantive law of another state, and such a clause can have a great effect on the substantive aspects of the case.   Choice-of-law analysis is burdened with several nuances and intricacies that require the skill and expertise akin to those of one of our experienced attorneys at Schecter Law.