Jurisdiction Clause in Lease Agreement

i DeLage Landen Fin. v. Leighton K. Lee Law Office, File No. A-3148-10T2, 2011 New Jersey Super. Unpublished. LEXIS 3059 (App. Div. 19 December 2011).

The Appeals Division of the New Jersey Superior Court recently stated in this DeLage Landing decision that a forum selection clause in an equipment lease “is enforceable unless it results from `fraud, undue influence or overwhelming bargaining power`, is `inappropriate` or `violates` strong public policy` and the forum selection clauses are `prima facie valid and enforceable`, so that the party seeking to derail a forum selection clause “bears the burden of establishing that they are invalid”. DeLage Landen Fin. Servs., at *7. In addition to these reasons for agreeing on the “forum” state for a potential case, it`s also important to get a tenant to accept jurisdiction – which is a slightly different topic. The U.S. Constitution and the local laws of each state protect a person or company from the obligation to defend against a lawsuit in a jurisdiction where they did not have “minimum contacts.” Finally, it is important for a lease to specify the “choice of law” made by the landlord and tenant, that is, New Jersey law applies to all disputes between the parties arising out of their business. A local attorney can advise your business on the main differences between the laws of different states that may relate to your company`s rental transaction. In any case, you don`t want to find your business in a few years that is subject to the arbitrary or unfathomable laws of a foreign state where the other party to the transaction resides – any more than you want to go there to participate in a mandatory reporting. As a general rule, courts will apply these “choice of law clauses”, even if without such a clause, the law of the chosen State would never have been applicable, since the chosen State may have nothing to do with the leasing transaction in question. A clause on the applicable law is an explicit manifestation of the intention of the parties and is generally respected by the courts. If there is a clause on the applicable law, the question of choice of law will be answered and the case will be advanced in accordance with the specified applicable law.

The applicable legal clauses are generally respected by the courts. However, according to the new (second) version of the conflict of laws § 187, there are two situations in which the courts may not comply with a clause of the applicable law. First, whether the court chosen does not have an essential relationship with the parties and, second, whether the application of the chosen law would prejudice the interests of public policy of another court having substantial interests in the case. Representatives of the parties are required to participate in the mediation conference with full decision-making power. This means that the person participating in the mediation is the final decision-maker on all issues raised by the dispute and has the legal capacity to enter into a binding settlement agreement. The mediation conference takes place largely in at least two stages: the mediation clause could require that the mediation take place within a very short time after the principal tenant has declared a breach of the lease, but before either party initiates arbitration. The mediation clause may require the mediator to be a certified mediator and also to have a minimum number of years of experience as a real estate lawyer or certified in real estate law or commercial disputes by the bar association of the state where the center is located. Below is an example of a mediation clause for a Florida mall with this in mind: An arbitration agreement can also support various other custom requirements.

However, all arbitration agreements must respect fundamental due process considerations and be fundamentally fair to be valid and enforceable. Here are some examples of additional requirements that should be considered: Applicable law or choice of law clause states that the laws of a mutually agreed jurisdiction govern the interpretation and performance of the terms of the contract. “The court will apply the law of the forum State to distinguish whether the clause is a `narrow` clause or a `broad` clause. This will determine whether the dispute falls within the scope of the choice of law provision. “Regulated by: Use standard rule clauses.” interpreted and applied in accordance with the law of the State… ». Alternatively, “Governed by” could be used alone and replace “interpreted, interpreted and applied under”. Similarly, the arbitration clause of the lease could also provide: (a) the chair of the arbitration panel must be a certified lawyer in real estate law or commercial disputes; and (b) the other two arbitrators must be non-lawyers, commercial property managers with at least 15 years of experience in shopping centre management. The arbitration clause may also restrict disclosure and require the final hearing to be held in a short period of time. In this way, the parties have a streamlined and quick process to resolve their dispute and then (hopefully) continue their business relationship with as little bitterness as possible. .

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