Great Buys is an internet-based company headquartered in New York that sells hou

Question

Great Buys is an internet-based company headquartered in New York that sells household electronics to consumers in the United States. The management team at Great Buys has some concerns about its online contracting process.

Please answer the following question regarding Great Buys:

Great Buys has been sued in different state courts all over the country, and it would like to know if an arbitration clause requiring that arbitration be conducted in New York City will be enforceable.

Is this arbitration clause enforcable if Great Buys headquarters are in another state? Please explain

Explanation / Answer

Yes, Great Buys can add an arbitration clause requiring that arbitration be conducted in New York City which is enforceable. Generally internet companies ask users to agree to terms and conditions before using their services. Here company can add a clause that “any disputes arising will be solved in particular court”. This has to be agreed by customer. This is called “Forum selection clause” and court generally accept this clause as in case of Bowen v. YouTube, Inc., 2008.

No, if the headquarters is outside of New York it would be difficult for company to add arbitration clause seeking enforcement in New York City. This is because there is ample support in law which states that forum selection clause should be implemented by court where company’s senior management team is located which necessarily means headquarters of the company.

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