Forum Selection Clauses, Non-signatories, and Personal Jurisdiction

Authors

John F. Coyle, Reef C. Ivey II Distinguished Professor of Law, University of North Carolina at Chapel Hill
Robin J. Effron, Professor of Law and Co-Director of the Dennis J. Block Center for the Study of International Business Law, Brooklyn Law School

Abstract

Who is bound by a forum selection clause? At first glance, the answer to this question may seem obvious. It is black letter law that a person cannot be bound to an agreement without her consent. In recent years, however, courts have not followed this rule with respect to forum selection clauses. Instead, they routinely enforce these clauses against individuals who never signed the contract containing the clause. Courts justify this practice on the grounds that it promotes litigation efficiency by bringing all of the litigants together in the chosen forum. There are, however, problems with enforcing forum selection clauses against non-signatories. First, there is the unfairness of binding a litigant to a contract without her consent. Second, there is the danger that relying on a forum selection clause to assert personal jurisdiction over a nonsignatory may be inconsistent with due process.

This Article critiques the rules that determine whether a non-signatory is bound by a forum selection clause. It first documents the emergence of a new doctrine—the closely-related-and-foreseeable test—that the courts have created to facilitate this practice. It then argues that the test serves as a portal to a parallel due process universe in which casual contacts and breezy assertions of foreseeability can connect a defendant to a forum selection clause in a way that would be, at best, highly scrutinized were they construed as potential minimum contacts with the forum. In a world of ever-tightening personal jurisdiction standards, courts have created a bubble of nearly unlimited jurisdiction for parties in close proximity to forum selection clauses. To address this problem, the Article proposes reforms that would provide more robust protections to nonsignatory defendants and, as importantly, impose a degree of order on an increasingly fractured due process landscape.

Recommended Citation

John F. Coyle & Robin J. Effron, Forum Selection Clauses, Non-signatories, and Personal Jurisdiction, 97 Notre Dame L. Rev. 187 (2021).
Available at: https://scholarship.law.nd.edu/ndlr/vol97/iss1/4