Forum Selection Clause

Any person may maintain an action or proceeding against a foreign corporation, non-resident, or foreign state if the action or proceeding arises out of or relates to any contract, agreement, or undertaking for which a choice of Illinois law has been made in whole or in part and that (i) is a contract, agreement, or undertaking, contingent or otherwise, in consideration of or relating to any obligation arising out of a transaction covering in the aggregate not less than $500,000 and (ii) contains a provision or provisions under which the foreign corporation or non-resident agrees to submit to the jurisdiction of the courts of the State. (735 ILCS 105/5-10)

“A forum selection clause in a contract is prima facie valid and should be enforced unless the opposing party show that enforcement would contravene the strong public policy of the state in which is case is brought, or that the chosen forum would be so seriously inconvenient for trial that the opposing party would be deprived or his or her day in court.” Yamada Corp. v. Yasuda Fire & Marine Ins. Co., 712 N.E.2d 926, 931 (Ill. App. Ct. 1999) (citations omitted) (enforcing forum selection clause in contract); IFC Credit Corp. v. Rieker Shoe Corp., 881 N.E.2d 382, 389 (Ill. App. Ct. 2007) (same). If both parties “freely enter into an agreement contemplating such inconvenience should a dispute arise, then one party cannot successfully argue inconvenience as the reason to void the forum clause.” IFC Credit Corp., 881 N.E. 2d at 389. “Furthermore a forum-selection clause made during an arms-length negotiation between experienced and sophisticated businesspeople should be honored and enforced absent some ‘compelling and countervailing reason’ otherwise.” Yamada Corp., 712 N.E. 2d at 931 (internal quotation and citations omitted); IFC Credit Corp., 881 N.E. 2d at 389.

Courts consider the following factors when determining whether or not a forum-selection clause is unreasonable: “(1) which law governs the formation and construction of the contract; (2) the residency of the parties involved; (3) the place of execution and/or performance of the contract; (4) the location of the parties and witnesses participating in the litigation; (5) the inconvenience to the parties of any particular location; and (6) whether the clause was equally bargained for.” Yamada Corp., 712 N.E.2d 926 at 931 (citation omitted); Aon Corp. v. Utley, 863 N.E. 2d 701, 707 (Ill. App. Ct. 2006) (enforcing forum selection clause); Compass Envtl., Inc., v. Polu Kai Services, LLC, 882 N.E. 2d 1149, 1156 (Ill. App. Ct. 2008) (same).

Even if a majority of the factors set forth above favor litigation in a different forum, Illinois courts may still conclude that the clause is reasonable. See Dace Int’l v. Apple Computer, 655 N.E. 2d 974, 977 (Ill. App. Ct. 1995) (forum selection clause reasonable despite the fact that four of the six factors favored litigation in a different forum); Macey & Aleman v. Simmons, 2011 WL 1456762, at *3 (N.D. Ill. Apr. 14, 2011) (applying Illinois law).

In Mellon First United Leasing v. Hansen, 705 N.E.2d 121 (Ill. App. Ct. 1998), the appellate court affirmed the trial court’s refusal to enforce a forum-selection clause in an equipment lease where the lessee was an unsophisticated consumer in a small transaction and the relevant language was in “small print on the back of a preprinted form,” making the agreement like an adhesion contract. Id., at 125. The court considered that the lessee was not in the office equipment business, and there was no indication that she had any particular expertise or equivalent bargaining power. Id.

Even where a party did not object to forum selection clauses, courts still refuse to enforce them where the clause is part of a “boilerplate” agreement and objecting parties were in disparate bargaining position (i.e. parties were forced to “take it or leave it”). See, e.g., Williams v. Ill. State Scholarship Comm’n., 563 N.E.2d 465 (Ill. 1990); IFC Credit Corp., 881 N.E. 2d at 389 (noting that “a forum selection clause contained in boilerplate language indicates unequal bargaining power, and the significance of the provision is greatly reduced”).

However, not all “boilerplate” clauses will be considered unenforceable. See IFC Credit Corp., 881 N.E. 2d at 390 (enforcing clause even though “it appears that the forum selection clause was boilerplate language in the preprinted agreement and the parties did not engage in any negotiation over these terms”)."

The legislative intent behind the statute preventing parties from giving jurisdiction to a Illinois court is to prohibit parties from conferring personal or subject matter jurisdiction if none existed by law, but the statute does not prevent a party from waiving personal jurisdiction and consensually bringing itself within the territorial limits of a particular Illinois court through the use of a forum selection clause.