Governing law submission to jurisdiction: Overview, definition, and example
What is governing law and submission to jurisdiction?
Governing law and submission to jurisdiction is a clause that tells you two things: (1) which state or country’s laws will apply to the contract (governing law), and (2) where legal disputes must be handled (submission to jurisdiction). This section doesn’t prevent lawsuits, but it sets the rules and location if a dispute ends up in court.
Why is governing law and submission to jurisdiction important?
In cross-border or even interstate agreements, this clause avoids confusion by specifying which legal system will be used to interpret the contract. Without it, each party might assume their home laws apply, which can lead to costly jurisdiction battles. It also gives clarity on where a lawsuit must be filed, helping businesses assess risk, cost, and legal exposure in advance.
Understanding governing law and submission to jurisdiction through an example
A California tech company signs a service agreement with a New York-based client. The contract states that California law governs the agreement and that both parties submit to the exclusive jurisdiction of California state courts. If a dispute arises over a missed payment, the client must go to court in California, not New York—even if that’s less convenient. This avoids arguments about where the case should be heard and what legal rules apply.
Example of a governing law and submission to jurisdiction clause
Here’s how a governing law and submission to jurisdiction clause may look like in a contract:
This agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to its conflict of law principles. Each party submits to the exclusive jurisdiction of the state and federal courts located in San Francisco County, California, and waives any objection to venue or forum based on inconvenience.
Conclusion
This clause decides the legal “playing field” for the contract. Whether you're working with out-of-state clients or international partners, knowing which laws apply and where disputes must be resolved can save significant time and cost down the road. Always check this section to understand where you'd be expected to defend or bring a claim.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.