Forum Selection
Parties need to consider (a) the location where the dispute will be heard and (b) whether the dispute will be resolved by litigation, arbitration, or mediation. To add a little complexity, parties need to decide whether arbitration or mediation awards will be binding or non-binding.
Contracts have choice of law provisions because a dispute may be heard in one state but the laws of another state apply. (The choice of law issue discussed in greater detail below). Therefore, the analysis is straightforward: do you want to hire your attorney or an attorney in a different state? This will undoubtedly add to your legal bill by a significant amount.
Now that most courts have Zoom, the issue of whether the client wants to attend some or all of the hearings is not as salient as it once was.
The choice whether to litigate, arbitrate, or mediate is largely dependent upon the terms of the arbitration/mediation clause. The primary issues used to make this determination are (A) the length of the dispute resolution period, (B) whether the arbitration is totally confidential, and (C) the cost differential between litigating and arbitrating. That said, there are subissues that must also be considered. These subissues were discussed previously: Effective Use of Arbitration Clauses
Choice of Law
I addressed this issue as it specifically related to artificial intelligence in a prior blog post without addressing the issue generally. Choice of law is an important issue in domestic and international contracting.
While many commercial laws are similar in the fifty states, there are two significant differences that may impact your particular situation. First, substantial differences between the laws enacted by (a) various state legislatures or (b) a state legislature and Congress are common. Examples of differences include different provisions regarding the elements of a tort, statutes of limitations, limitations on damages awards, and the arbitrability of a dispute. Trade secret disputes provide great illustrations of conflicting laws:
- Federal law permits plaintiffs to seize violative items ex parte–without the party being accused not knowing about the lawsuit when the accuser presents its case to the court.
- Different states limit the punitive damages that can be recovered by plaintiffs in different amounts.
- Different states have different limitations periods as to when a trade secrets case needs to be filed.
Second, there may be differences between US and international law. These differences exist for both obvious and not so obvious reasons. One example is that different countries may be party to different versions of a treaty. Two examples are the Vienna Convention on Treaties and the Warsaw Convention governing aviation disputes.
Failure to appreciate these issues can be extraordinarily costly in the long term.
David Seidman is the principal and founder of Seidman Law Group, LLC. He serves as outside general counsel for companies, which requires him to consider a diverse range of corporate, dispute resolution and avoidance, contract drafting and negotiation, and other issues. In particular, he has a significant amount of experience in hospitality law by representing third party management companies, owners, and developers.
He can be reached at david@seidmanlawgroup.com or 312-399-7390.
This blog post is not legal advice. Please consult an experienced attorney to assist with your legal issues.
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