HF 2695 prohibits transfers of civil actions — and voids decisions or contract terms — that would result in applying a foreign law which denies or is likely to deny a party a fundamental liberty, right, or privilege guaranteed by the U.S. Constitution or the Iowa Constitution. "Foreign law" is defined broadly to cover laws of non‑U.S. jurisdictions and rules of international organizations, tribunals, and courts. The bill targets courts, arbitration panels, tribunals, and administrative agencies and applies prospectively to matters commenced after the act’s effective date.
The measure creates a two‑track remedy: (1) a categorical bar on transferring a civil action if the transfer would result in application of foreign law that would or likely would violate constitutional protections, and (2) automatic voidness of rulings, contracts (and severable provisions), or forum‑selection clauses that result in application of foreign law that denies constitutional rights. Narrow exceptions preserve ecclesiastical matters, voluntarily assumed business submissions to foreign law, controlling federal preemption, and existing state‑supreme‑court precedent.
For practitioners this raises immediate procedural and choice‑of‑law questions — from how courts evaluate foreign norms to how businesses draft clauses to preserve enforceability.
At a Glance
What It Does
The bill bars transfer of civil actions when the transfer would cause a foreign law to be applied that would violate or is likely to violate U.S. or Iowa constitutional rights. It also declares void and unenforceable any ruling, contract term (including severable clauses), or foreign‑forum clause that results in applying a foreign law which denies those constitutional protections.
Who It Affects
Iowa state and administrative courts, arbitration panels operating under Iowa contracts, in‑state businesses and any party that uses or is subject to choice‑of‑law or forum‑selection clauses naming non‑U.S. law or fora, and litigants in transnational disputes with a nexus to Iowa.
Why It Matters
The bill directly limits the ability of parties to shift disputes to foreign legal regimes and to enforce foreign‑law choice clauses, raising litigation over venue and choice‑of‑law, increasing demands on courts to evaluate foreign norms, and creating potential conflict points with federal arbitration law and international comity obligations.
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What This Bill Actually Does
HF 2695 gives Iowa tribunals a screening duty: before transferring a case or enforcing a clause that would send a dispute to foreign law, the decisionmaker must consider whether application of that foreign law would deny a party a constitutional liberty, right, or privilege. The statute’s definition of "foreign law" is expansive, covering national laws of other countries and rules issued by international organizations or tribunals, so the screening obligation will arise in a wide range of cross‑border matters.
If a court, arbitration panel, tribunal, or administrative agency applies foreign law and that application "denies" constitutional protections, the bill makes the resulting ruling void and unenforceable. Similarly, it voids contracts or severable contract provisions that select a foreign law or grant jurisdiction to a foreign forum when the result is denial of constitutional rights.
For transfers specifically, the statute uses the slightly broader standard "would violate or is likely to violate," meaning tribunals must make a forward‑looking judgment about the anticipated effect of applying the foreign law in the receiving forum.The bill carves out several practical limits. It does not attempt to overturn existing Iowa Supreme Court precedent, it preserves adjudication of internal religious matters, and it exempts business entities that "voluntarily and knowingly" submit themselves to foreign law or fora.
It also acknowledges federal preemption: obligations under treaties or federal law remain outside its reach. Finally, the statute is explicitly prospective — it governs only proceedings, contracts, arbitrations, and administrative matters commenced on or after the act’s effective date, so it does not retroactively invalidate prior judgments or agreements under its text.
The Five Things You Need to Know
The bill defines "foreign law" broadly to include laws, legal codes, or systems outside any U.S. state or territory and rules of international organizations, tribunals, or courts.
Section 1 bars any transfer of a civil action if the transfer would result in application of foreign law that "would violate or is likely to violate" a fundamental liberty, right, or privilege under the U.S. or Iowa Constitution.
Section 2 makes void and unenforceable (a) rulings or decisions based on foreign law that deny constitutional protections, (b) contracts or severable provisions selecting foreign law, and (c) contract clauses granting jurisdiction to foreign tribunals where application of the foreign law would deny constitutional protections.
The bill preserves several exceptions: it does not displace Iowa Supreme Court precedent, it excludes internal ecclesiastical matters, it exempts entities that voluntarily and knowingly submit to foreign law or forum, and it defers to federal preemption including treaty obligations.
The statute applies only prospectively — to civil actions, contracts, arbitrations, and administrative proceedings commenced on or after the act’s effective date.
Section-by-Section Breakdown
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Ban on transferring cases that would subject parties to foreign laws violating constitutional rights
This section creates a prophylactic rule: a court, arbitration panel, tribunal, or administrative agency must not transfer a civil action to another forum if that transfer would result in applying foreign law that "would violate or is likely to violate" constitutional protections. Practically, this imports a preventive jurisdictional inquiry into transfer motions and forum‑non‑conveniens analyses, requiring a prediction about how the receiving forum would treat the relevant foreign law and whether that treatment would impinge on constitutional guarantees.
Broad definition of foreign law
Subsection (1) spells out that "foreign law" includes not only statutes of other countries but also legal codes and rules of international organizations or tribunals. That scope means the statute can reach multilateral administrative regimes and decisions of international bodies, not solely bilateral or municipal foreign statutes — an important drafting choice that expands the statute’s practical reach.
Voidness of decisions, contract clauses, and foreign jurisdiction provisions
Subsections (2)–(4) establish the remedial mechanism: decisions, contracts (including severable provisions), and clauses conferring jurisdiction to foreign fora are "void and unenforceable" if applying the foreign law "denies" a party a constitutional liberty, right, or privilege. The text differentiates between the transfer bar’s predictive standard ("would" or "likely to") and the voidance rule’s present‑tense standard ("denies"), which could influence litigation strategy — transfer challenges turn on projections, while enforcement challenges to a rendered decision or clause turn on whether a denial actually occurred.
Specified exceptions and limits
This subsection lists four explicit limits: it disclaims any intent to overturn Iowa Supreme Court precedent; it excludes ecclesiastical/internal religious matters from coverage; it exempts business entities that "voluntarily and knowingly" subject themselves to foreign law or forums; and it recognizes that the statute does not apply where federal law preempts state law (including treaty obligations). Each carve‑out narrows the statute’s reach but also creates question spots — notably how courts will determine whether a business’s submission to foreign law was truly "voluntary and knowing."
Prospective application to new matters only
The applicability clause makes the act prospective: it governs civil actions, contracts, arbitrations, and administrative proceedings commenced on or after the law’s effective date. That choice avoids express retroactivity but leaves open transition issues for multi‑stage matters (contracts formed earlier but litigated later; pending arbitrations) that practitioners will need to parse.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Iowa plaintiffs and defendants whose constitutional liberties are at risk: The statute empowers them to resist transfers or enforcement that would subject them to foreign laws likely to curtail constitutional protections, preserving in‑state access to federal and state rights.
- Civil‑rights and family‑law litigants: Parties in cases where foreign legal regimes impose fundamentally different substantive protections (privacy, speech, marriage, custody) gain a statutory shield against being forced into fora applying those norms.
- State‑level public‑interest attorneys and regulators: The law strengthens the state’s ability to prevent outsourcing adjudicative outcomes to foreign legal systems that would undermine state or federal constitutional guarantees.
Who Bears the Cost
- Iowa courts, tribunals, and administrative agencies: Judges and panels must now evaluate foreign law and make predictive assessments about likely constitutional impacts, increasing evidentiary and fact‑finding burdens and the need for foreign‑law expertise.
- Businesses and contract drafters using foreign choice‑of‑law or forum clauses: Such clauses risk being declared void and unenforceable if application of the chosen foreign law would deny constitutional rights, reducing certainty for cross‑border contracting and potentially increasing transactional costs.
- Arbitration providers and international counterparties: The bill exposes arbitral awards and forum selections to state‑level invalidation, complicating enforcement and heightening the chance of jurisdictional contests and parallel proceedings.
- Insurers and litigators handling transnational disputes: Increased litigation over venue and enforceability of clauses will raise litigation costs and insurance exposures for parties operating across borders.
Key Issues
The Core Tension
The bill confronts a genuine policy trade‑off: protect individuals from being forced into foreign legal systems that would strip away constitutional rights, or preserve predictable, enforceable cross‑border contracting and international comity. Strengthening constitutional safeguards in state courts increases procedural complexity and unpredictability for international commerce and arbitration — there is no mechanical way to fully satisfy both interests.
The statute’s core operational difficulty is evidentiary: courts will need reliable tools to determine what a foreign law actually says, how a foreign forum would apply it, and whether its application "denies" or "is likely to deny" constitutional protections. That typically requires expert proof on foreign law, which raises costs and scheduling complications for routine transfer or enforcement motions.
The bill’s differing standards — a prospective "would violate or is likely to violate" test for transfers versus an actual‑effect "denies" test for voiding decisions and contracts — will seed jurisdictional chess: parties can litigate the standard most advantageous to them at each procedural stage.
The act also sits uneasily against federal law and international obligations. Although the text preserves federal preemption and treaty obligations, conflicts with the Federal Arbitration Act and doctrines of international comity may prompt federal‑court intervention.
The "voluntarily and knowingly" exemption for business entities is helpful in theory but vague in practice: courts will have to decide the threshold for meaningful consent to foreign law, which could vary by contract form and bargaining power. Finally, while the bill is prospective, gray areas remain for contracts entered before the effective date but litigated afterward or for parallel proceedings spanning the effective date; expect contested motions over which regime controls and potential preemption suits raising federal supremacy issues.
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