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Re: venue, jurisdiction, and laws of another state Donna Sofaer 03 Apr 2000 14:53 EST


I have a couple thoughts about this.

 The contract clause that Auburn has objected to contains three provisions.
The first is a governing law clause, which provides that contract is to be
construed in accordance with the law of the offeror state.  The second is a
forum selection clause, which provides that any lawsuits arising under the
contract must be brought in the offeror state's courts (and the federal
courts in that state).  The third clause is a partial waiver of the offeror
state' s sovereign immunity, under which it permits claims against it to be
adjudicated in an administrative tribunal.

Although the first provision is not literally inconsistent with the language
in your state's constitution, my experience is that no public agency will
knowingly agree to be governed by another state's law.  Counsel for the
offeror state has undoubtedly been on the opposite side of this clause
before, and knows full well that the solution is for the contract to be
silent as to the governing law.  State institutions all across the U.S.
successfully overcome this negotiation hurdle everyday.

You might want to rethink your objection to the third provision.  It has
nothing to do, at least directly, with your state's sovereign immunity.  To
be sure, it limits Alabama's remedies against the offeror state, but
apparently no more than Alabama law limits their remedies against you.
Additionally, although it isn't entirely clear from your posting, it sounds
as if Auburn is providing services and the offeror state is paying for the
services.  This means that Auburn's risk of nonperformance by the other
party is primarily a risk of nonpayment.  Perhaps you could satisfactorily
manage this risk through artful drafting of the payment clause.  Check with
your counsel.

That leaves you with the second provision, which your counsel obviously has
to evaluate in juxtaposition with Alabama's constitutional sovereign
immunity clause.  I suppose it would be possible to try to negotiate an
addendum stating that the provision shall not be interpreted to waive
Auburn's sovereign immunity under Alabama law.  I wonder if the offeror
state would drop the second provision if you agreed to the third?

Jim Simpson, General Counsel
Public Health Institute

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