New York courts generally will enforce contractual choice of law provisions where the chosen law has a reasonable relationship to the parties to the contract or the transaction at issue.1 When the choice of law provision is clear and unambiguous, the courts have an eye toward giving effect to the parties’ intent and will not inject their own concepts of fairness. Still, it is well-recognized that New York courts will decline to enforce a choice of law provision where: (1) the provision is illegal; (2) there is no reasonable relationship between the provision and the parties or transaction; or (3) the provision contravenes "some fundamental principle of justice, some prevalent conception of good morals, some deep-rooted tradition of the common weal."2

Even where a choice of law provision is enforceable, however, New York courts may not apply the chosen law to all aspects of a case. In this article, we explore such limitations, some of which have been the subject of recent Commercial Division decisions. First, several New York courts have held that the law of the state of incorporation will govern corporate governance issues, including standing to bring shareholder derivative actions, notwithstanding a contrary choice of law provision.3 Second, a New York court may not apply a choice of law provision to claims that are not dependent upon the agreement containing that provision. Third, New York courts do not apply choice of law provisions to procedural matters, which are governed by the law of the forum, while "matters of substantive law fall within the course chartered by choice of law analysis."4

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