Jurisdiction and governing law are completely different terms. In legal English, it is very important to be aware of the differences of the two terms.
A governing law clause enables the parties to specify the rules of law which will apply to the interpretation of the agreement or in case of a dispute.
Especially in contracts where an international element is involved and the contract can be related to more than one country, it is important to state in a contract which set of laws will govern it. It is possible that the parties are located in different countries, or even that the place for performance is in a third country.
Jurisdiction is the geographic area over which legal authority to hear and determine causes of action extends.
Unfortunately, contracts will lead to disputes related to the subject matter of the contract. In this case, the jurisdiction clause states that the parties have agreed to submit the case to a certain court or courts of a certain country. The parties may decide to submit to the jurisdiction of the courts of a country different from where one or the other operates. Such a decision may be based on convenience, cost or certain procedural rules.
