Jurisdiction

Definition of Jurisdiction

In contract law, jurisdiction refers to the geographic or legal authority under which a contract is interpreted and disputes are resolved. The jurisdiction clause identifies the courts or governing body that will handle any legal proceedings arising from the agreement.

Jurisdiction is often paired with a governing law clause, which specifies which state or country’s laws apply to the contract.

Why Jurisdiction Matters

Clear jurisdiction clauses prevent uncertainty and costly conflicts over where disputes should be heard. Without one, parties may face “forum shopping,” where each side argues for a different legal venue.

Choosing the right jurisdiction ensures:

• Predictability in enforcement and interpretation.

• Lower legal costs and logistical burdens.

• Consistency with governing law provisions.

• Better risk management in international contracts.

Best Practices for Jurisdiction Clauses

1. Align jurisdiction with the governing law clause.

2. Choose a neutral or mutually convenient forum.

3. Distinguish between exclusive jurisdiction (only one court) and non-exclusive (either party may choose).

4. Consider arbitration or mediation for cross-border disputes.

5. Review jurisdictional enforceability before signing international agreements.

Example of Jurisdiction in Practice

A U.S. company and a U.K. vendor include a jurisdiction clause specifying that disputes will be resolved exclusively in New York courts under New York law.