Clause library
Governing law and jurisdiction clause, explained
A governing law and jurisdiction clause names which country's law applies to the contract and whose courts hear disputes.
What does a governing law and jurisdiction clause do?
This clause answers two separate questions. Governing law is the legal system used to interpret the contract and decide what each party's rights are. Jurisdiction is which courts can hear a dispute. The two usually point to the same place, but they do not have to. A jurisdiction clause can be exclusive, so only the named courts can hear a claim, or non-exclusive, so other courts are also possible. Without a clause, deciding which law applies can become a dispute in itself, which is why most commercial contracts include one, often near the end.
Example wording
Example · our own drafting
This agreement and any dispute or claim arising out of or in connection with it, including non-contractual disputes or claims, is governed by the law of [country]. The parties irrevocably agree that the courts of [country] have exclusive jurisdiction to settle any such dispute or claim.
In Plain English
The law of the named country decides what this contract means, including disputes that are not strictly about the contract itself. If there is a disagreement that goes to court, only the courts of that country can hear it, and both sides accept that.
What do people negotiate in a governing law and jurisdiction clause?
- Which law applies, since each party often prefers its home law.
- Whether jurisdiction is exclusive or non-exclusive.
- Whether disputes go to court, arbitration or mediation first.
- Whether non-contractual claims are covered as well as contract claims.
Which contracts include it?
Lex includes this clause in, among others:
- Mutual NDA
- Statement of work
- Services agreement (MSA)
Draft a mutual NDA with this clause
Free for the other sideLex drafts it in Plain English beside the legal wording. Share one link; both sides agree and sign.
Frequently asked questions
What is a governing law clause?
It is the clause that says which legal system applies to the contract. That law is used to read the terms and decide each party's rights if there is a dispute.
What is the difference between governing law and jurisdiction?
Governing law is which law applies. Jurisdiction is which courts hear a dispute. They usually match, but a contract can choose one country's law and another country's courts.
What does exclusive jurisdiction mean?
It means the parties agree that only the named courts can hear disputes. A non-exclusive clause allows claims in the named courts and also in other courts that would otherwise have jurisdiction.