Governing Law Clauses

For many years, lawyers with too much time on their hands have debated whether there is a difference in effect between these two governing law clauses:

"This contract shall be governed by New York law."

"This contract shall be governed by New York law, without regard to conflict-of-laws principles."

Some believe that the first clause, which does not address conflict-of-laws rules, requires application of New York’s conflict-of-laws principles. As a result a court might apply the substantive law of a jurisdiction other than New York--despite the clear intent of the provision.

As this client alert from Shearman & Sterling notes, the debate is finally over. Now we can all get back to arguing about the permissibility of splitting infinitives.

MAW