North Carolina Choice of Law Changes

Choice of law provisions are common in business agreements. Where one or both parties are in North Carolina, a North Carolina choice of law is common, too.

A new law in North Carolina allows for parties to choose North Carolina law and litigation in North Carolina, even when they have no other ties to the state.

Session law 2017-123 (formerly SB 621) provides, in part:

§ 1G‑3. Choice of North Carolina law in business contracts.

(a) Choice of Law. – The parties to a business contract may agree in the business contract that North Carolina law shall govern their rights and duties in whole or in part, whether or not any of the following statements are true:

(1) The parties, the business contract, or the transaction that is the subject of the business contract bear a reasonable relation to this State.
(2) A provision of the business contract is contrary to the fundamental policy of the jurisdiction whose law would apply in the absence of the parties’ choice of North Carolina law.

(b) Controlling Law. – To the extent this section conflicts with G.S. 25‑1‑301(c), G.S. 25‑1‑301(c) controls.

§ 1G‑4. Choice of North Carolina forum in business contracts.

(a) Choice of Forum. – Notwithstanding any other provision of law, a party to a business contract may bring an action in the courts of this State for a dispute arising from the business contract if the business contract contains both of the following provisions:

(1) A provision where the parties agree that North Carolina law shall govern their rights and duties in whole or in part, pursuant to G.S. 1G‑3.
(2) A provision where the parties agree to litigate a dispute arising from the business contract in the courts of this State.

(b) Personal Jurisdiction and Forum Non Conveniens. – A party that enters into a business contract that satisfies the requirements of subsection (a) of this section consents to the personal jurisdiction of the courts of this State in an action for a dispute arising from the business contract. A court shall not stay or dismiss the action pursuant to G.S. 1‑75.12 or the doctrine of forum non conveniens.

It is unclear to me what advantage North Carolina courts and North Carolina law would provide to parties with no other connections here. But, as a lawyer in North Carolina, I certainly appreciate it. 😉