‍What is a jurisdiction clause?

A jurisdiction clause clarifies where legal proceedings must take place if a disagreement occurs between the parties. This is sets it apart from a governing law clause. Whilst the governing law clause focuses on the applicable law, the jurisdiction clause focuses on the court that will hear the case. 

Why is a jurisdiction clause important?

Without a clearly defined jurisdiction, parties may find themselves in disagreement over where the case should be heard. A jurisdiction clause helps avoid this conflict, by pre-emptively agreeing on where disputes will be resolved. It is beneficial for companies to hear cases in their own jurisdictions, because it saves time and resources. 

How do you write a jurisdiction clause?

We’ve answered common questions to help you draft a jurisdiction clause that aligns with your legal and operational needs:

How do you determine the right jurisdiction?

• Where are the parties located? Choose a location familiar and accessible to both parties, or favor the jurisdiction where enforcement is easier.
• What legal system offers more protection? Some jurisdictions are more favorable depending on the type of dispute or industry involved.

Tip: For international contracts, most parties will aim to align governing law and jurisdiction clauses with their own needs. 

What language should a jurisdiction clause include?

A jurisdiction clause might be phrased like this:

“The courts of the Netherlands shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this agreement.”

Advice: be precise and consistent. Avoid vague terms like “competent courts” without naming a jurisdiction.

Should you use exclusive or non-exclusive jurisdiction? How do you decide?

• Use exclusive when you want full control over where disputes are heard.
• Use non-exclusive when flexibility is needed. For example, when multiple jurisdictions might be practical.

Best practice: in commercial contracts with global partners, exclusive clauses are preferred to limit uncertainty.

Legal considerations and common pitfalls

• Align with governing law: the jurisdiction should match the law governing the contract. Mismatches can create procedural complications.
• Avoid silent contracts: leaving jurisdiction unspecified opens the door to forum shopping and delays.
• Enforceability does matter: Some jurisdictions may not honor foreign jurisdiction clauses. Always check local rules if you plan to enforce internationally.

Common Mistake: assuming a governing law clause automatically covers jurisdiction, as you’ve learned: it doesn’t!

How does a jurisdiction clause fit into contract lifecycle management?

A CLM platform like Docfield can help streamline and standardise the inclusion of jurisdiction clauses across contract types by offering clause libraries with pre-approved wording. Using smart fields and conditional logic, it can also automate the inclusion of these clauses based on your preference. Any inconsistencies are flagged ahead of signing, and contracts can subsequently be filtered on the basis of smart fields. 

For scale-ups and legal teams managing cross-border operations, this level of control and visibility is crucial. 

Conclusion

A Jurisdiction Clause is a key part of any well-drafted contract, especially in today’s global business environment. It helps ensure that disputes are handled predictably and fairly, saving both time and legal expense. When implemented effectively—and tracked within your CLM platform—it becomes a powerful tool for reducing legal ambiguity and scaling contract governance across borders.

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