When is a jurisdiction and applicable law clause valid?

To know when a jurisdiction and applicable law clause is valid, it is useful to consider several aspects:

• That it be clear and precise about the court or the law chosen by the parties. It must be written in a language that the parties understand and that is consistent with the rest of the contract.
• That it is consented to by the parties, that is, that there has been a free and voluntary manifestation of submitting to the agreed court or law. It cannot be imposed by one of the parties without the knowledge or acceptance of the other, nor can it be abusive or disproportionate.
• It must be legal, that is, that it respects the mandatory rules or public order of the country whose law or court is chosen, as well as the country where the contract or sentence is to be executed. Neither can the clause be contrary to international or community regulations that regulate conflicts of laws or jurisdictions.

If the clause meets these requirements, it will be considered valid and binding for the parties, and will have legal effects in the event of a dispute. Otherwise, it will be considered null or ineffective, and the general criteria of judicial competence and applicable law will be applied.

Related concepts

• Jurisdiction and applicable law clause
• What happens if a jurisdiction and applicable law clause is not included in a contract?
• What does it mean for a contract to be legally binding?
• What does it mean that a contract does not produce any legal effect?