No less a tribunal than the U.S. Supreme Court will try to clarify construction-industry conflict about where lawsuits between primes and subs are tried. Lower courts have disagreed about what to do, but the prevailing industry wisdom is that it is best to try prime-sub disputes near the project location. Yet some primes insist subs sign "forum selection" clauses, which require trials in the prime's home state—and subs continue to cave in and sign them. Neither action speaks well for the state of risk-management in the construction industry. Despite the forum-selection clauses, many subs will sue locally for money they say they are owed, no matter the contract specifics.
The case is called Atlantic Marine Construction Co. Inc. v. U.S. District Court for the Western District of Texas. Argued before the Supreme Court on Oct. 9, the case involves more than the simple matter of what is the best forum. It revolves around the legal issue of whether a judge is free to exercise discretion to void a clause in a private contract between a prime and a sub.