Starting in the November/December 2023 issue of PARCEL, previous installments of PARCEL Counsel have explored various aspects of a lawsuit, beginning with terminology and basic concepts such as venue and jurisdiction. In this issue, we will look at what are often the most important aspects of a lawsuit – the location of the trial and the law that is chosen to resolve the dispute.
In contractual disputes a litigant may be comfortable when litigating a case in the courts and under the law of the state in which it is headquartered and has offices. It may be less comfortable and choose to settle a dispute if required to litigate under unfamiliar laws in a distant location.
Federal and state courts have complicated special rules that determine when a court can hear a case and exercise jurisdiction over the litigants. If jurisdiction exists, a judge or arbitrator presiding over a case must also determine what law to apply. This is often the law of the state where the case is litigated.
However, many business disputes involve parties and transactions in multiple states. In these situations, state “choice of law” rules may apply that assist the fact finder in determining which law should be used to resolve the dispute. In contract cases, these rules often require consideration of the location of each of the parties; where the contract was formed; and where the contract was performed.
Applying these rules often leads to factual and legal disputes at the initiation of a lawsuit. To reduce these uncertainties, many companies include in their contracts provisions that stipulate the forum and applicable law to use for dispute resolution.
Transportation and logistics service providers frequently include choice of law and forum clauses in their standardized form contracts; tariffs; bill of lading terms; and general terms and conditions. Using such clauses with multiple customers allows these providers uniformity and certainty over where and how disputes involving their services will be resolved, especially for loss and damage claims.
The United States Supreme Court has repeatedly held that such clauses in contracts are presumably valid and should be enforced --- even if they are in form contracts such as a Bill of Lading and even if the clause stipulates that disputes must be resolved outside of the United States and under foreign law. The Court has reasoned that parties to a contract are presumed to know its terms and even if there is little room to negotiate changes if a party does not agree with a contract provision it should not enter into the agreement or use the services, for instance, by tendering a shipment without a properly drafted independently negotiated contract in place.
The application of these clauses frequently makes it economically impractical to pursue potential litigation, especially for claims involving international shipments where the claim would be resolved outside of the United States under foreign law.
Litigating any dispute is usually the option of last resort. Litigating a dispute in an inconvenient forum under a potentially unfavorable law is not a good situation to be in. Thus, it is very important that parcel shippers know all of the documents, including those which may be incorporated by reference, and the terms in those documents that will govern their transactions including the law and forum for resolving any dispute. It is especially important to be aware of the controlling terms before using a transportation provider’s services so that a shipper can attempt to negotiate more favorable choice of law and forum terms to the shipper than may be offered by the provider. All for now!
Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A., the Senior Editor of transportlawtexts, inc., and Director of Virtual Education for the Transportation and Logistics Council, Inc.
Andrew M. Danas is Partner, Grove, Jaskiewicz and Cobert, LLP.For more information, visit www.gjcobert.com or email adanas@danaslaw.com. The information contained in this article is intended to be general background information. It does not constitute and should not be relied upon as legal advice. Readers should contact a qualified attorney should they have a specific legal question.
Previous columns, including those of William J. Augello, may be found on PARCELindustry.com. Your questions are welcome at brent@primuslawoffice.com.
