Will a Montana court enforce this clause requiring disputes to be litigated in a particular forum?
Yes, under the same Restatement-driven analysis that governs choice-of-law clauses: Montana abandoned an older public-policy-void approach to forum-selection clauses. Polzin v. Appleway Equipment Leasing reversed a district court that had declared forum-selection clauses “void as unconstitutional” and held they are instead tested under the Restatement (Second) of Conflict of Laws. San Diego Gas & Electric Co. v. Ninth Judicial District Court confirms the resulting practice: courts apply the chosen forum's OWN law to decide whether the clause itself is valid, citing “Polzin, ¶ 19 (applying Washington law in determining that the forum selection clause was valid and that Montana venue was inappropriate under the terms of the contract).” That means a Montana court asked to enforce a forum clause will not necessarily test it under Montana's own forum-selection doctrine at all: it may apply the SELECTED forum's law to the validity question first, exactly as Polzin did with Washington law and San Diego Gas & Electric did with California law. Both of those cases ended with the Montana action gone: in San Diego Gas & Electric the Supreme Court ordered that the district court's refusal to dismiss or stay “is VACATED” and remanded “with instructions to DISMISS the action in accordance with this Opinion.”
The trap
There is one hard, statutory exception that does NOT depend on the Restatement analysis at all: for a CONSTRUCTION contract for a project located in Montana, § 28-2-2116(1), MCA makes VOID and unenforceable any provision “that requires any litigation, arbitration, or other dispute resolution proceeding arising from a dispute pertaining to the contract to be conducted in another state,” full stop: no reasonableness balancing, no materially-greater-interest test, just a flat statutory bar. Outside construction, do not assume the Restatement analysis is a rubber stamp: Restatement § 187(2)(b) still lets Montana public policy override a chosen forum where Montana has a materially greater interest in the dispute than the chosen state, and this rule did not independently verify how often Montana courts have actually invoked that override after Polzin (Polzin itself reversed a district court that tried to use public policy to void the clause outright, not one that properly ran the § 187(2)(b) balancing test and lost). Also distinguish VENUE within Montana from an out-of-state forum clause entirely: this rule concerns the latter.
6 authorities
- statuteMont. Code Ann. § 28-2-2116enactment date not established
The words that state the rule
A provision, covenant, clause, or understanding that is in, collateral to, or affects a construction contract for a project in this state and that makes the contract subject to the laws of another state or that requires any litigation, arbitration, or other dispute resolution proceeding arising from a dispute pertaining to the contract to be conducted in another state is against the public policy of this state and is void and unenforceable.
The words that state the rule
In reliance on our decision in Keystone v. Triad Systems Corporation, 1998 MT 326, 292 Mont. 229, 971 P.2d 1240, the District Court concluded that forum selection clauses are against Montana public policy, stating: “choice of forum clauses are void as unconstitutional.”
- case329 P.3d 1264San Diego Gas & Electric Co. v. Ninth Judicial District CourtMont.decided 2014read it at the source ↗
The words that state the rule
Accordingly, we accept the choice of law clause as valid and apply California law in interpreting the forum selection clause contained in the Purchase Agreement. See Polzin, ¶ 19 (applying Washington law in determining that the forum selection clause was valid and that Montana venue was inappropriate under the terms of the contract). B.
The words that state the rule
In sum, we refuse to apply the law of the state chosen by the parties if three factors are met: (1) but for the choice of law provision, Montana law would apply under § 188 of the Restatement; (2) Montana has a materially greater interest in the particular issue than the parties chosen state; and (3) application of the chosen state’s law would contravene a Montana fundamental policy.
- case329 P.3d 1264San Diego Gas & Electric Co. v. Ninth Judicial District CourtMont.decided 2014read it at the source ↗
The words that state the rule
A contractual choice of law clause is valid unless three factors can be established: “(1) but for the choice of law provision, Montana law would apply under § 188 of the Restatement', (2) Montana has a materially greater interest in the particular issue than the parties [sic] chosen state; and (3) application of the chosen state’s law would contravene a Montana fundamental policy.”
- case329 P.3d 1264San Diego Gas & Electric Co. v. Ninth Judicial District CourtMont.decided 2014read it at the source ↗
The words that state the rule
IT IS FURTHER ORDERED that the District Court’s Order of April 28, 2014, denying San Diego’s Motion to Dismiss or Stay is VACATED. This matter is remanded to the District Court with instructions to DISMISS the action in accordance with this Opinion.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.