Is it possible that a corporate policyholder might litigate against its insurance company in a jurisdiction with no ties whatsoever to the policyholder or the claim? Similarly, even if an action proceeds in a venue in which the policyholder or claim is located, could the law of a foreign jurisdiction still apply to the interpretation of the insurance policies? Although such results may seem counterintuitive, insurance companies often attempt to force litigation in jurisdictions where they believe the applicable law will be most favorable to them and least favorable to policyholders. Even when the action is brought in a court in the same state that the policyholder is located, insurance companies often argue that the law of another jurisdiction should apply to the interpretation of the insurance policies at issue.
These related tactics are commonly referred to as “forum shopping” – and policyholders that are unaware and unprepared can find themselves litigating in the wrong place with the wrong law. How can policyholders avoid this “forum shopping-spree”?