Contract Interpretation: Sovereignty or Geography?

When a forum selection clause calls for the resolution of disputes in the “courts of the State of Colorado,” does that include the federal court sitting in Colorado? In other words, is the “of” meant to designate sovereignty or geography? If the language refers to the state courts to the exclusion of the federal courts, it is a term of sovereignty. Otherwise, if the language encompasses Colorado state courts and the federal court sitting in Colorado, it is a term of geography. The Tenth Circuit recently held that the language refers to sovereignty, and concluded that the contract did not designate the federal courts sitting in Colorado as a forum.

The Tenth Circuit followed a Fifth Circuit decision in a similar case which involved a forum selection clause designating the “Courts of Texas.” The court looked to Black’s Law Dictionary, which defined “of” as a term “denoting that from which anything proceeds; indicating origin, source, descent, and the like.” The Fifth Circuit reasoned that “[f]ederal courts indisputably proceed from, and find their origin in, the federal government, though located in particular geographic regions.”

American Soda, LLP v. U.S. Filter Wastewater Group, Inc., __ F.3d __ (10th Cir. Nov. 7, 2005).

[Meredith R. Miller]