I promise that any disputes between us will be argued at your house.  Time passes and a dispute begins to brew.  Now, I want to argue at my house, not at yours.  You pay costs to argue at my house that you wouldn’t have incurred had I done as agreed.  Should I have to reimburse your costs?

A Federal Court in Northern California said yes – I have to pay your costs because I broke my promise.

During a project for the U.S. Navy in Djibouti for electrical and mechanical power-plant upgrades, a Subcontractor agreed that any disputes between it and the Prime Contractor would be resolved in a California Federal Court.  The Prime is a U.S. company with its headquarters in California.  The Sub is a Lebanese company with no regular presence in the U.S.  In fact, it appears the Sub has never been to the U.S.

Recap: The dispute has nothing to do with anything near your headquarters/office/house, the Project is nowhere near your office, I’ve never been near your office, it’s probably more convenient for you to argue near your office, which is why you included this term in the Subcontract, and (most importantly) I agreed to only argue near your office.

Result: The argument will be near your office, not mine and not near the Project where we both worked and lived for many months.  And, I now have pay your costs incurred because I tried to argue with you near the Project.


Gilbane Federal v. United Infrastructure Projects FZCO, Case No. 14-cv-03254 (U.S. Dist. Ct., N.D. Cal., Aug. 11, 2017).

Published On: March 1, 2018

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