Validity of Forum Selection Clauses in LA Construction Contracts

Louisiana Revised Statute §9:2779 provides that with respect to construction contracts when one of the parties is domiciled in Louisiana and the work is to be performed in Louisiana, any provision requiring disputes to be resolved in a forum other than Louisiana are inequitable and against public policy rendering them null and void and unenforceable.  Further, the law covers arbitration and requires that Louisiana construction contracts be governed by the laws of Louisiana.

Forum Selection Clauses selecting Out of State Venue are Unenforceable

The United States District Court for the Western District of Louisiana recently relied on R.S. 9:2779 in holding a mandatory forum selection clause unenforceable.  In Town of Jonesboro v. Pittsburg Tank & Tower Maintenance Co., Inc., the Town found the defendant’s work unacceptable and sued them in state court.  The Court acknowledged that forum selection clauses are generally acceptable as per the Supreme Court’s decision in Shelter Mutual Insurance Co. v. Rimkus Consulting Group, Inc., however, denied the forum selection clause because it called for the forum to be Kentucky and was in violation of LA R.S. 9:2779.

Forum Selection Clauses selecting Louisiana Venues are Enforceable

Ever since the Supreme Court decision in Shelter v. Rimkus, forum selection clauses have been enforced all over the state as they were no longer presumed to be violative of public policy.  The applicable statute in this scenario specifically outlaws forum selection clauses choosing forums outside of Louisiana indicating the legislature intended to allow forum selection in construction contracts so long as the matter was litigated within the state’s boundaries.

Keep in mind, the above information only applies to construction contracts.  In a radical decision with far-reaching implications, the Louisiana Supreme Court recently held that insurance policies requiring litigation for Louisiana losses can be brought in foreign forums were valid and enforceable.

Should you have any questions or you would like to discuss this issue in further detail, please do not hesitate to contact us to schedule a free consultation.