Negotiating the Governing Law clause

The governing law/jurisdiction clause and the dispute resolution clause are often the most overlooked clauses at the contract negotiations stage. This is usually the first clause that a disputes counsel looks at.

Its not uncommon to find these clauses clumped together under one badly drafted, unwieldy clause that leaves a lot to the imagination of the counsel interpreting it post dispute.

The governing law clause stipulates which law governs the #contract, i.e. which jurisdiction's laws would be used to interpret the clauses (for e.g. Indian Law, Singaporean law, English law, etc) .

The jurisdiction clause stipulates which judicial forum will have jurisdiction to adjudicate the dispute (Arbitration seated in Delhi, Courts in Delhi, Courts in London, Courts in Mumbai, and so on).

The dispute resolution clause tells you the method of dispute resolution - whether #Arbitration, Mediation followed by arbitration, or Courts of a particular jurisdiction.

These clauses achieve special relevance in the times of e-commerce. At the time of creating an account with these platforms, one robotically checks the 'I agree to the terms and conditions' box. This is a tad ironical considering that there is often a check box which states 'I am not a Robot' just below that.

As more and more business owners use digital platforms and payment systems to handle their commercial affairs, they seldom read the 'Terms of Use' of these websites. My wife, a small business owner herself, uses the following seller services. I read through their terms and conditions and was quite surprised by the stark differences in the dispute resolution and jurisdiction clause in these commonly used websites.

Shopify - Courts of Singapore

Amazon India - Arbitration seated in Delhi

Paypal India - Upto Rs. 7 Lakhs - Arbitration

Above Rs. 7 lakhs - Courts of Mumbai

Wix - If the user is outside the USA, then courts of Tel Aviv, Israel

If the User is within the USA, then the Courts of New York City

Instamojo - Arbitration seated in Bengaluru

Razorpay - Courts of Bengaluru

While one can't usually negotiate the terms of these click-wrap agreements, such terms can be negotiated when dealing with a party on a more equal footing. Unfortunately, when folks try to DIY this all important part of their #business they regret it greatly when things turn sour.