No Choice of Law Provisions Allowed: Colorado Law Applies to All Colorado Construction Projects
Choice of law provisions are often a negotiated term in construction contracts. Oddly enough, Colorado’s anti-indemnity statute makes at least this one term easy for the parties to agree on. C.R.S. 13-21-111.5(6)(g) provides that, “[n]otwithstanding any contractual provision to the contrary, the laws of the state of Colorado shall apply to every construction agreement affecting improvements to real property within the state of Colorado.”
This particular subsection of the statute does not appear to have been the subject of any Colorado case law, yet. However, a number of commentators have discussed whether subsection (6)(g) applies to all construction contracts affecting real property in the State of Colorado, and the answer has been a resounding, “yes.”
Shortly after the statute was enacted, one commentator noted that the purpose of this provision was to prevent parties from contracting around Colorado’s updated indemnification provisions through contractual choice of law clauses. See Brian G. Eberle, S.B. 07-087 and the Enforceacility of Indemnification Provisions in Colorado Construction Contracts, 36 Colo. Law. 59, 36-SEP Colo. Law. 59 (Sept. 2007). As this article notes, the choice of law limitation is “not limited to indemnification clauses and appears to require application of Colorado law to all terms of construction agreements affecting improvements in Colorado real property.”
A more recent article concerning oil and gas engineering and construction contracts for the Rocky Mountain Law Foundation similarly concluded that subsection (6)(g) does, in fact, mean that Colorado law applies to all construction contracts affecting real property in Colorado, regardless of whether the contract contains a choice of law provision specifying the use of another state’s law. See Daniel R. Frost & Nora Pincus, Oil and Gas Engineering and Construction Contracts, 2013 No. 3 RMMLF-INST PAPER No. 13, fn. 25 (May 2013) (citing favorably to similar law in Illinois); see also Kevin R. Sido, et al, § 15.02 Contractual Indemnification Provisions, AELCDP s 15.02 (4th ed., 2017 Supplement).
Although parties remain free to include a different state’s law in a construction contract for work in Colorado, any such provision would most likely be deemed invalid and/or unenforceable.