Submitted by: Submitted by monicaacurio
Views: 79
Words: 682
Pages: 3
Category: Business and Industry
Date Submitted: 11/24/2013 07:03 PM
Choice of forum and forum-shopping
If a contract is silent on the country of the proper court, the parties involved in a dispute may to invoke the jurisdiction of the national courts in which they think they have the highest likelihood of success, or the courts which are most convenient for them. This practice, known as “forum-shopping”, can create problems. A party might try to bring suit in a country only tangentially related to the contract, or, after a lawsuit has commenced in one country, bring a counter- suit in yet another country.
In order to avoid these uncertainties, parties to an international contract will frequently include a forum selection or choice of forum clause. Commonly, the party with the stronger negotiating position will propose a choice of forum clause stipulating that lawsuits must be brought in the stronger party’s domestic courts.
Choice of forum clauses are usually subject a test of reasonableness: the chosen forum must bear some logical relation to the subject of the contract. Thus, in a lawsuit arising under a distribution contract between a large German manufacturer and small Puerto Rican distributor, it was held that a choice of forum clause specifying Mexico as the appropriate forum was unreasonable. The tacit effect of such a provision was, the court held, to render it difficult where the choice is reasonable, choice of forum clauses may not be respected in all countries or in all situations.
TYPES OF JURISDICTION – THE COMPETENCE OF A FORUM TO RECEIVE A CASE
1) Subject matter jurisdiction – this term refers to the power of a particular court to hear a particular type of case. In some countries, for example, only special commercial courts are empowered to decide commercial cases. This scope for receiving cases is sometimes also referred to as the competence of the particular court.
2) Personal Jurisdiction- crucial in international cases is the issue of personal jurisdiction over foreign parties – whether a court...