This Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales. The parties irrevocably agree that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this Agreement or its subject matter or formation (including non-contractual disputes or claims).
Here is a plain English explanation of the suggested Governing Law and Venue clause:
The first part of this clause states that the contract will be governed by English law. This means that any disputes related to the contract will be decided according to English law.
The second part says that any lawsuit or claim arising from the contract must be brought in the courts of England and Wales. The parties agree to make these courts the exclusive venue for handling disputes.
By including this, the parties settle that English law will be used to interpret the contract and that the English and Welsh courts have sole authority over any legal complaints arising from the contract. This provides certainty on which law and court system applies if there is a dispute later on.
The purpose is to establish clear rules upfront on which jurisdiction governs the agreement and where any legal issues must be handled.
This avoids conflict or confusion down the road if disagreements occur. Specifying the legal system and venue provides stability for the contractual relationship.
The concept of specifying a governing law and jurisdiction in contracts has its origins in Roman law.
As the Roman empire expanded and trade occurred across diverse cultures, a need emerged to determine which regional laws would apply to commercial transactions and disputes. Roman courts asserted authority to decide which legal system governed in cross-border agreements.
In medieval Europe, governing law clauses became important as commerce increased between autonomous provinces and city-states. Commercial contracts stipulated which locality's laws applied to avoid uncertainty. The concept continued into the era of colonialism and international trade as European powers established specific laws and courts to govern overseas contracts and activities.
By the 18th-19th century, governing law and jurisdiction clauses were widely used in English common law. With Britain's global enterprises and trade, its commercial contracts needed to define the applicable law and dispute forums. The jurisdiction of English courts over contractual claims also expanded during this period.
Today, choice of law and venue clauses are common across jurisdictions and legal systems. With modern commerce being highly globalized, these clauses bring certainty for cross-border business relationships. English law in particular is often specified for international commercial contracts due to its stability, predictability and established precedent.
Specifying England/Wales for jurisdiction is also attractive given the renowned independence and neutrality of its court system.