Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Unfavorable Forum Selection Clauses

By Linda D. Kornfeld and Daniel H. Rylaarsdam
July 30, 2008

More and more frequently, insurers are including 'choice of forum' provisions in their policies in which these insurers identify a particular state or country where coverage litigation 'must' be pursued. Usually, the required forum is more favorable to the insurer that issued the policy, than to the insured that purchased it. For example, foreign insurers sometimes will include a British forum selection clause. This is not surprising ' British courts generally do not resolve insurance coverage disputes by jury trial or allow bad faith claims that would support an award of punitive damages. Given this favorable treatment for insurers, insurers involved in coverage litigation often are quick to argue that the law is clear with respect to how forum selection clauses should be interpreted. According to these insurers, the provisions must be strictly enforced ' there is no room for any argument regarding where coverage litigation should go forward.

While in the past few decades a body of law has developed in federal courts that provides some support for this approach, the standard is not nearly as rigid as insurers would have their insureds and courts overseeing coverage litigation believe. In fact, there are many arguments that an insured can make to overcome strict application of a forum provision contained in a relevant insurance policy.

Read These Next
The DOJ's Corporate Enforcement Policy: One Year Later Image

The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.

The DOJ's New Parameters for Evaluating Corporate Compliance Programs Image

The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.

Use of Deferred Prosecution Agreements In White Collar Investigations Image

This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.

Bankruptcy Sales: Finding a Diamond In the Rough Image

There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.

A Lawyer's System for Active Reading Image

Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.