A Guide to Commercial Forum Shopping For In-House Lawyers

INTERNATIONAL commercial lawyers usually conduct their forum shopping in advance of disputes, avoid the US and, as a result of the Woolf reforms, are now more likely to use the UK courts.

Since the early 1990s, commercial courts in the European Union have allowed parties to bring actions in the forum of their choosing.

The US courts, on the other hand, are considered by lawyers to be “parochial”, tending not to allow action unless a US company is involved, although the rules vary from state to state.

John Beechey, partner in charge of international commercial arbitration at Clifford Chance, advises every client to choose the forum for dispute resolution when drawing up a commercial contract between two parties.

However, he says lawyers frequently do not choose the forum until a late stage in the proceedings – the so-called “midnight clause”- or contradict the choice elsewhere in the contract – the “pathological clause”.

He says that “surprisingly often” lawyers omit a forum clause altogether, causing delay and extra expense when the parties fall out and then have to compete for the forum of their choice.

Simmons & Simmons international litigation partner Karyl Nairn predicts the Woolf civil justice reforms will spur a rise in the amount of commercial forum shopping in the UK as European lawyers “realise the new rules are stacked in favour of the claimants”.

Nairn says that new rules, which require defendants to produce documents, give reasons for their defence and comply with deadlines, will stop defendants withholding documents and employing delaying tactics.

Nairn says the Brussels and Lugano conventions on forum shopping lay down strict guidelines for litigation in EU countries, preventing parties from switching jurisdiction once proceedings are issued. This discourages lawyers from issuing letters before action since this could incite the other side to serve a writ in a particular court, fixing the forum.

Nairn says: “A lot of people don't act quickly enough and come a cropper as a result because they end up before a Norwegian judge who specialises in family law.”