Facts
- Giorgio Fabbri, an Italian citizen residing in Buenos Aires, formed Argoville Corp., N.V. in the Netherlands Antilles; its principal asset was a single parcel of real property in Dade County, Florida.
- Fabbri sold Argoville to Inversiones Continentales, N.V., another Netherlands Antilles corporation, through multiple agreements, including a stockholder’s settlement agreement and an option agreement.
- Both agreements contained provisions stating that disputes would be governed by Netherlands Antilles law and that the parties submitted to the jurisdiction and venue of Netherlands Antilles courts.
- A dispute arose, and Fabbri sued in Dade County, Florida for breach of contract.
- The defendants moved to dismiss, asserting the forum-selection provisions required litigation in the Netherlands Antilles.
- The trial court denied dismissal; the Third District affirmed under a rule treating foreign forum-selection clauses as void attempts to “oust” Florida courts of subject-matter jurisdiction.
- The Florida Supreme Court accepted review due to conflict with another district court decision enforcing forum-selection clauses under a fairness-based test.
Issues
- Whether contractual provisions selecting a foreign forum and foreign law for future disputes are enforceable in Florida courts.
- Whether such clauses are void as attempts to divest Florida courts of subject-matter jurisdiction, or instead are enforceable as a basis for a court to decline to exercise jurisdiction.
Decision
- The Florida Supreme Court rejected the Third District’s per se rule invalidating forum-selection clauses as jurisdictional “ouster” provisions.
- The Court held forum-selection clauses are presumptively valid and enforceable unless enforcement is unreasonable or unjust, or violates strong public policy.
- The Court approved a fairness-based standard for evaluating enforcement, including whether the clause resulted from overreaching or overwhelming bargaining power and whether it was intended primarily to inconvenience a party by shifting a local dispute to a remote forum.
- The Court disapproved conflicting lower-court precedent and required application of the enforceability standard rather than automatic invalidation.
Legal Principles
- Parties cannot, by contract, deprive a court of subject-matter jurisdiction; however, a court may decline to exercise jurisdiction in recognition of a valid forum-selection agreement.
- Forum-selection clauses are generally enforceable when freely and voluntarily agreed to, absent overreaching or overwhelming bargaining power.
- Enforcement may be denied if it would contravene strong public policy or if the clause functions mainly to transfer a local dispute to a remote forum to inconvenience one or both parties.
- The enforceability inquiry focuses on reasonableness and fairness, not on a categorical rule of invalidity.
Conclusion
The court established that Florida will ordinarily enforce contractual forum-selection clauses, treating them as a permissible basis for a court to decline to exercise jurisdiction unless enforcement would be unfair, unreasonable, or contrary to strong public policy.