The Federal Arbitration Act Trumps the Building and Construction Contracts Act

The Federal Arbitration Act (“FAA”) preempts state laws prohibiting arbitration of contractual disputes out of that state. The latest ruling that confirms this is the case R.A Bright Construction, Inc. v. Weis Builders, Inc. The original suit, filed in Will County Circuit court by Bright Construction, maintained that Bright was owed over seven and a half thousand dollars by Weis for concrete and utilities work on a new Wal-Mart in Lockport, Illinois. In their contract, Weis and Bright included an arbitration clause that stipulated if any dispute arose between the two, it would be settled by arbitration in Minnesota. Weis filed a motion with the court to stay the action and compel arbitration in Minnesota, claiming that the FAA mandated arbitration in this matter. The motion was denied and Weis filed an interlocutory appeal to the Illinois Appellate Court to argue that the trial court erred when denying the motion to compel arbitration, contending that the FAA preempts any state law that prohibits arbitration of matters out of the state.

Weis argued that the FAA should be used by the court to determine that arbitration should be held in Minnesota to resolve their dispute with Bright. Weis had to establish that its contract involved interstate commerce. Weis established this through documents that showed Bright had purchased nearly $80,000 of supplies from Wisconsin. The court concluded that this evidence, and that Weis has offices in multiple states, proved that the contract evinces a transaction involving commerce intended by section two of the FAA. Weis had proved that this case involves interstate commerce and the FAA should be used to determine whether to compel arbitration.

Once the contract was established as demonstrating a transaction involving commerce, Weis asserted any arbitration clause in such a contract – including their own – is “valid, irrevocable and enforceable,” under the FAA. Bright argued that the Illinois Building and Construction Contracts Act prohibits enforcement of such a clause because it requires that an Illinois forum needs to be selected for arbitration. Weis argued that the FAA preempts the Illinois Building and Construction Contracts Act. The Appellate Court ruled in favor of Weis and reversed the decision of the trial court and remanded the case with directions to refer the matter to arbitration in accordance with the contract. This case confirmed the rulings of previous cases where there was a conflict between the FAA and state statutes that required arbitration to take place within that state.

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