Key point A choice-of-law provision designates the state law that will govern a legal transaction.
A federal appeals court ruled that a "choice of law" provision in a missions agency's employment contract requiring all employment disputes to be adjudicated on the basis of Virginia law was enforceable and required a missionary couple's lawsuit in a Tennessee court asserting various employment claims had to be resolved on the basis of Virginia law. In 2006, a married couple (the "plaintiffs") began investigating the possibility of becoming missionaries with the International Mission Board of the Southern Baptist Convention (IMB). In 2008, the couple accepted missionary positions in India. The couple sold their home and most possessions, and the wife resigned from her job of 17 years. At the time of their assignment, the plaintiffs signed an employment contract stating: "Once approved for service, your relationship to the IMB will be that of an 'at will' employee of a Virginia religious, non-profit corporation, with all aspects of that relationship originating in Virginia and controlled by Virginia law."
The plaintiffs worked in New Delhi from January 2009 until November 2010. In October 2010, the IMB terminated the couple's employment, purportedly because they were no longer needed. The couple sued the IMB, and the Southern Baptist Convention, in a federal district court in Tennessee, claiming that their employment was terminated after they informed their superiors of illegal practices in the construction of the office building in New Delhi. These practices included bribes, false documents to procure permits, and unsafe building practices. The plaintiffs' lawsuit alleged various theories of liability under Tennessee law, including breach of contract and retaliatory discharge. The plaintiffs claimed that the choice-of-law provision should be disregarded because the IMB did not execute the contract in good faith. The plaintiffs claimed that Tennessee law should govern the dispute based on Tennessee's adherence to the doctrine of lex loci contractus, a presumption that a contract is "to be governed by the law of the jurisdiction in which it was executed absent a contrary intent."