Chosen Law Found Not to Apply to Enforce Restrictive Covenants

Generally, a New York court will enforce a choice-of law clause that chooses the law of a foreign jurisdiction to govern matters concerning a contract provided the chosen law bears a reasonable relationship to the parties or their transaction.¹ A New York court hearing a claim for breach of that contract may, however, refuse to apply the chosen law if its application would offend a fundamental public policy of New York. Such offense would occur when application of the foreign law would violate some fundamental principle of justice, some prevalent conception of good morals or some deep-rooted tradition of the commonweal.² The party invoking the public policy exception bears the heavy burden of proving the foreign law is offensive to New York’s public policy.³ Notions of expediency and fairness or a showing that the foreign law is unreasonable or unwise are not sufficient to allow a New York court to ignore the parties’ chosen law.⁴

Nearly a century ago, Judge Benjamin Cardozo wrote that the fact that New York law is different from the law of another state “is not enough to show public policy forbids us from enforcing a foreign right….We are not so provincial to say that every solution of a problem is wrong because we deal with it otherwise at home.”⁵