Legal Alert - U.S. Supreme Court Holds That Forum Selection Clauses In Construction Contracts Should Be Rigorously Enforced
by Eric H. Spencer
As we predicted in October, the United States Supreme Court has issued a unanimous decision upholding a general contractor’s ability to require its subcontractors to litigate disputes in the state or federal court of its choosing. Thus, regardless of where the key witnesses or evidence are located, the fact that all the subcontractors are locally based, or that a state has a public policy that prohibits enforcement of any clause in a construction contract that requires litigation elsewhere, federal courts are now required under Atlantic Marine Constr. v. U.S.D.C. West. Dist. Texas—in all but exceptional circumstances—to dismiss or transfer out-of-state any subcontractor lawsuit that is filed other than where the general contractor specified. The result is a boost for general contractors that operate across state lines, and a wake up call for subcontractors to shift their lobbying efforts from the state capitols to the halls of Congress.