Originally from Dispute Resolution Journal

CONSTRUCTION-MOTIONS TO STAY-CHOICE OF-LAW CLAUSE-FEDERAL ARBITRATION ACT PREEMPTION-CALIFORNIA CIVIL PROCEDURE CODE ANN. § 1281.2(C)

The U.S. Supreme Court declined to set aside a ruling by the California Court of Appeals that raised the question of whether the state arbitration law was preempted by the Federai Arbitration Act.

Volt Information Sciences and the Board of Trustees of Stanford University entered into a contract for the installation of an electrical conduit system on the university campus. The contract contained an American Arbitration Association (AAA) arbitration clause referring to the AAA's Construction Industry Arbitration Rules, as well as a choice-of-law clause providing that the contract was to be governed by the law of the place where the project was located. A dispute arose over the issue of compensation for extra work, and Volt filed a demand for arbitration. Stanford, in turn, filed an action in state court against Volt and sought indemnity from two other companies involved in the project. Stanford did not have arbitration agreements with the companies from which it sought indemnification.