Originally from Dispute Resolution Journal

COMMERCIAL-FEDERAL ARBITRATION ACT-STATE LAW-CHOICE-OF-LAW-WAIVER-AAA RULE 10(C)-ILLINOIS

The court ruled that a party's actions constituted a waiver of its right to arbitrate and its right to have a particular state's law apply. In addition, the Federal Arbitration Act does not apply where the parties have agreed to arbitrate in accordance with state law, even though the transaction involves interstate commerce except where the applicable state law would prevent the arbitration agreement from being enforced according to its terms.

Richard T. Yates, along with other entities, and Doctor's Associates entered into eight franchise agreements, all containing the same substantive terms . The agreements contained a provision fo r arbitration in accordance with the AAA's Commercial Arbitration Rules and a choice-of-law clause providing fo r Connecticut law to govern. Doctor's, and the entity it created to assist in the leasing aspect of the franchise agreements, were incorporated in Connecticut. Five of the franchises were located in lllnois. A dispute arose over Yates' expansion plans in connection with the remaining three franchise agreements.