SUBSTANCE-TARGETED CHOICE-OF-LAW CLAUSES

Recent cases highlight two persistent problems in United States litigation: the frequency with which parties seek to validate an otherwise unenforceable provision through a choice-of-law clause, and the disparate results courts have reached in such cases. These problems, while not wholly new, have recently become more troublesome and widespread. Courts, however, have not grown more consistent in their approach to them. On the contrary, they increasingly reach varied results on highly similar facts, resulting in endless legal uncertainty, forum shopping, and doubts about judicial impartiality. These effects are all the more problematic because, as most conflicts scholars would agree, parties should not be allowed to choose a jurisdiction's law solely for the purpose of validating a contested contractual provision; indeed, permitting them to do so is at odds with most purposes of contractual choice-of-law enforcement. For this reason, this Article proposes that, rather than fall back on complicated public policy exceptions to contractual choice of law, courts should instead identify and refuse to apply choice-of-law clauses that are adopted for the purpose of making a separate contractual provision enforceable. This Article refers to such clauses as "substance-targeted." Courts typically do not distinguish between targeted and non-targeted choice-of-law clauses. As a result, targeted clauses are often treated as if they represent an ordinary instance of allowing contracting parties the autonomy to choose the law applicable to their dispute. Yet they involve meaningfully different considerations, both because of the reasons that parties choose to include them and because of their ultimate effects. Unlike conventional choice-of-law clauses, substance-targeted clauses are neither aimed at achieving predictability nor likely to result in it. Their frequent use encourages litigation, disadvantages weaker parties, and fosters fear about results-oriented reasoning when their enforceability is tested. These pernicious effects call for a fundamentally different approach to choice-of-law analyses.