Contract provisions which seek to force a weaker party to litigate in a remote, inconvenient location are common. Those with greater financial resources (often the paying party rather than the performing party) use these types of provisions to discourage claims by those with less resources.
A large construction contractor, with substantial financial ability, will seek to force a subcontractor with a dispute to use scarce financial resources to have a dispute heard in a distant location by inserting such a clause in a subcontract.
When an issue arises, the subcontractor may walk away from a meritorious claim, rather than pursue it, because of the higher cost associated with doing so in a remote jurisdiction.
California Code of Civil Procedure Section 410.42 (2014), first enacted in 1991, and currently in force, renders unenforceable a contract provision which requires a subcontractor to litigate or arbitrate with a contractor in a forum outside California. The code section voids these types of provisions where the contractor and subcontractor have principal offices in California, and where the contract is for a public or private work of improvement in California.
This statute is helpful to subcontractors, and this law and other relevant law should be reviewed if you have a contract with this type of clause.
