January 25, 2013
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.
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