Choice of law in Texas

In The Bremen, the Supreme Court held that a "forum clause should control absent a strong showing that it should be set aside," and that "[t]he correct approach [is] to enforce the forum clause specifically unless [the party opposing it] could clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching."

Under Texas choice-of-law rules governing contracts (including oilfield indemnity clauses), we look to the Restatement (Second) of Conflict of Laws — specifically section 187 for contracts that contain an express choice of law, and section 188 for those that do not.

The Court indicated that a clause would come within these exceptions if enforcement would contravene a strong public policy of the forum in which suit was brought, or when the contractually selected forum would be seriously inconvenient for trial.

Justice OWEN delivered the opinion of the Court, in which Justice HECHT, Justice SMITH, Justice WAINWRIGHT and Justice BRISTER joined. The trial court denied a motion to enforce a contractual provision under which the parties agreed that all dispute resolution proceedings, including litigation, would take place in the State of New York. Because the facts are undisputed and the trial court clearly abused its discretion, we conditionally grant a writ of mandamus directing the trial court to dismiss this case.

The insurance policy contained a forum-selection clause by which the parties agreed that all disputes would be resolved in the State of New York: L. Choice of Law and Forum — In the event that the Insured and the Company dispute the validity or formation of this policy or the meaning, interpretation or operation of any term, condition, definition, or provision of this policy resulting in litigation, arbitration or other form of dispute resolution, the Insured and the Company agree that the law of the State of New York shall apply and that all litigation, arbitration or other form of dispute resolution shall take place in the State of New York.

We categorically reject Dreyfus's arguments. The forum-selection clause at issue is enforceable. To the extent the trial court concluded otherwise, it clearly abused its *115 discretion. We turn to whether the clause should be enforced by mandamus.

For the foregoing reasons, we conditionally grant a writ of mandamus directing the trial court to grant AIU's motion to dismiss. Chief Justice PHILLIPS filed a dissenting opinion, in which Justice O'NEILL, Justice JEFFERSON and Justice SCHNEIDER joined.

The parties’ Master Service Agreement contains a detailed choice-of-law provision, but none of it applies to this case. The provision states that the governing law will be: (1) maritime law for operations on navigable waters, and (2) Texas law for operations on land in Texas and New Mexico. 11 As the drilling site here was on land in Louisiana, neither circumstance applies.

Restatement section 188 provides that “an issue in contract [is] determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties.” 18 In making that decision, we take into account the contacts listed in section 188 and the principles listed in section 6.

As we have rejected Sonat’s conclusion that Louisiana law would inevitably void its indemnity, we decline to use that argument against it and hold that it waived any dispute regarding negligence. Accordingly, although we disagree with the court of appeals’ reasoning, we affirm its judgment reversing the application of Texas law and.remanding to the trial court for further proceedings applying Louisiana law.

But that is not entirely true; Louisana law would invalidate Sonat’s indemnity only if Sonat was negligent or strictly liable, 39 an issue that has never been decided. Similarly, Texas law would partially invalidate these unlimited indemnities by limiting them to the agreed amount of insurance coverage.

We do not hold today that Louisiana law should cover all indemnity disputes stemming from oilfield accidents there.

The Master Service Agreement is 21 pages long with 92 separately denominated paragraphs; had the parties intended to choose Louisiana law for all paragraphs rather than just one or two, it is odd they did not say so in some more general way.

The court of appeals sustained the insurer’s point, finding that Louisiana law applied because it was the place the contract was performed and was impliedly chosen by the parties. While we disagree with those reasons, we agree with the court’s ultimate conclusion that Louisiana law applies and that remand is required. Accordingly, we affirm.

Because mandamus is an extraordinary remedy which undermines the normal appellate *122 process, courts reserve its use for very special circumstances.

As a rule, we do not specifically enforce contractual rights by mandamus. We have done so in arbitration cases not just because it effectuated the parties agreement, but because of other special circumstances.

(a) Except as provided by Section 271.007 , 271.008 (b), 271.009 , 271.010 , or 271.011 or by Chapter 272 , the law of a particular jurisdiction governs an issue relating to a qualified transaction if: (1) the parties to the transaction agree in writing that the law of that jurisdiction governs the issue, including the validity or enforceability of an agreement relating to the transaction or a provision of the agreement; and (2) the transaction bears a reasonable relation to that jurisdiction. (a-1) Unless otherwise agreed in writing, the choice of governing law specified in the terms applicable to a certificated or uncertificated security issued by a foreign state as defined by 28 U.S.C. Section 1603 in a qualified transaction, including any change in that governing law, applies retroactively to all issues relating to such security. (b) The law of a particular jurisdiction governs an issue described by this section regardless of whether the application of that law is contrary to a fundamental or public policy of this state or of any other jurisdiction. (c) A security issued by a foreign state as defined by 28 U.S.C. Section 1603 in a qualified transaction may be modified or amended, in accordance with such security's terms, to permit amendment of the terms of the security by less than unanimous consent, and to choose the law of a different jurisdiction to govern the security. An amendment described by this subsection applies retroactively unless otherwise agreed by the parties in writing.

In this chapter, "qualified transaction" means a transaction under which a party: (1) pays or receives, or is obligated to pay or is entitled to receive, consideration with an aggregate value of at least $1 million; or (2) lends, advances, borrows, or receives, or is obligated to lend or advance or is entitled to borrow or receive, money or credit with an aggregate value of at least $1 million.

For purposes of this chapter, two or more substantially similar or related transactions are considered a single transaction if the transactions: (1) are entered into contemporaneously; and (2) have at least one common party.

For purposes of this chapter, a reference to the law of a particular jurisdiction does not include that jurisdiction's conflict-of-laws rules.

(a) For purposes of this chapter, a transaction bears a reasonable relation to a particular jurisdiction if the transaction, the subject matter of the transaction, or a party to the transaction is reasonably related to that jurisdiction. (b) A transaction bearing a reasonable relation to a particular jurisdiction includes: (1) a transaction in which: (A) a party to the transaction is a resident of that jurisdiction; (B) a party to the transaction has the party's place of business or, if that party has more than one place of business, the party's chief executive office or an office from which the party conducts a substantial part of the negotiations relating to the transaction, in that jurisdiction; (C) all or part of the subject matter of the transaction is located in that jurisdiction; (D) a party to the transaction is required to perform in that jurisdiction a substantial part of the party's obligations relating to the transaction, such as delivering payments; (E) a substantial part of the negotiations relating to the transaction occurred in or from that jurisdiction and an agreement relating to the transaction was signed in that jurisdiction by a party to the transaction; or (F) all or part of the subject matter of the transaction is related to the governing documents or internal affairs of an entity formed under the laws of that jurisdiction, such as: (i) an agreement among members or owners of the entity, an agreement or option to acquire a membership or ownership interest in the entity, and the conversion of debt or other securities into an ownership interest in the entity; and (ii) any other matter relating to rights or obligations with respect to the entity's membership or ownership interests; and (2) a transaction in which: (A) all or part of the subject matter of the transaction is a loan or other extension of credit in which a party lends, advances, borrows, or receives, or is obligated to lend or advance or entitled to borrow or receive, money or credit with an aggregate value of at least $25 million; (B) at least three financial institutions or other lenders or providers of credit are parties to the transaction; (C) the particular jurisdiction is in the United States; and (D) a party to the transaction has more than one place of business and has an office in that particular jurisdiction.

(c) If a transaction bears a reasonable relation to a particular jurisdiction at the time the parties enter into the transaction, the transaction shall continue to bear a reasonable relation to that jurisdiction regardless of: (1) any subsequent change in facts or circumstances with respect to the transaction, the subject matter of the transaction, or any party to the transaction; or (2) any modification, amendment, renewal, extension, or restatement of any agreement relating to the transaction.

Except as provided by Section 271.008 (b), 271.009 , 271.010 , or 271.011 and by Chapter 272 , if the parties to a qualified transaction agree in writing that the law of a particular jurisdiction governs the interpretation or construction of an agreement relating to the transaction or a provision of the agreement, the law of that jurisdiction governs that issue regardless of whether the transaction bears a reasonable relation to that jurisdiction.

(a) Except as provided by Section 271.008 (b), 271.009 , 271.010 , or 271.011 or by Chapter 272 , this section applies if: (1) the parties to a qualified transaction agree in writing that the law of a particular jurisdiction governs the validity or enforceability of an agreement relating to the transaction or a provision of the agreement; (2) the transaction bears a reasonable relation to that jurisdiction; and (3) a term of the agreement or of that provision is invalid or unenforceable under the law of that jurisdiction but is valid or enforceable under the law of the jurisdiction that has the most significant relation to the transaction, the subject matter of the transaction, and the parties. (b) If this section applies: (1) the law of the jurisdiction that has the most significant relation to the transaction, the subject matter of the transaction, and the parties governs the validity or enforceability of a term described by Subsection (a)(3); and (2) the law of the jurisdiction that the parties agree would govern the validity or enforceability of the agreement or provision governs the validity or enforceability of the other terms of the agreement or provision.

(a) Sections 271.004-271.007 apply to the determination of the law that governs an issue relating to a transaction involving real property other than a matter described by Subsection (b), including the validity or enforceability of an indebtedness incurred in consideration for the transfer of, or the payment of which is secured by a lien on, real property. (b) Sections 271.004-271.007 do not apply to the determination of the law that governs: (1) whether a transaction transfers or creates an interest in real property for security purposes or otherwise; (2) the nature of an interest in real property that is transferred or created by a transaction; (3) the method for foreclosure of a lien on real property; (4) the nature of an interest in real property that results from foreclosure; or (5) the manner and effect of recording or failing to record evidence of a transaction that transfers or creates an interest in real property.

Sections 271.004-271.007 do not apply to the determination of the law that governs: (1) the validity of a marriage or an adoption; (2) whether a marriage has been terminated; or (3) the effect of a marriage on property owned by a spouse at the time of the marriage or acquired by either spouse during the marriage.

Sections 271.004-271.007 do not apply to the determination of the law that governs: (1) whether an instrument is a will; (2) the rights of persons under a will; or (3) the rights of persons in the absence of a will.

Sections 271.004-271.007 do not apply to the determination of the law that governs an issue that another statute of this state or a statute of the United States provides is governed by the law of a particular jurisdiction.