North Carolina Journal of International Law and Commercial Regulation, Vol. 2, No. 1 (1977), pp. 29-37

Abstract

In this decade, the United States Supreme Court decided two cases which revolved around the enforceability of choice of forum clauses contained in transnational commercial contracts. The decisions which the Court rendered reshaped significantly the legal contours of the enforceability of such clauses. In the two cases, the Court signaled that it was prepared to recognize the distinction between what may be termed "internal" public policy and what may be termed "international" public policy. The recognition of this distinction is likely to have a vital bearing on the right of persons to provide for a specific foreign judicial or arbitral forum as part of the transnational agreement into which they have entered.

Before discussing the impact of the two cases on the effectiveness of choice of forum clauses, it is appropriate to define the two varieties of public policy, particularly in terms of how they pertain to issues raised by choice of forum clauses. The relationship between "internal" public policy and "international" public policy was an approximate analogue in the distinction made in French law between ordre public interne and ordre public international. The distinction is that one set of standards is applied to transactions which are performed in a local context, while another set of standards is applied to transactions which have international elements. An example of the former class of transactions is a contract which is entered into by two nationals and which is to be performed within their country; an example of the latter class of transactions is a contract which is entered into by persons of different nationalities and which is to be performed in a country other than the place where the contract is entered into.

The standards required by ordre public interne are parts of the total law of the forum from which there may be no derogation. The standards required by ordre public international can differ from standards of the local law of the forum, provided that the transaction contains sufficient transnational elements. Nevertheless, there remain certain forum law standards that even transnational transactions must meet. That is, the ordre public international of the forum is deemed to include certain of the standards required by the ordre public interne of the forum.

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