Skip to content

Menu

LexBlog, Inc. logo
NetworkSub-MenuBrowse by SubjectBrowse by PublisherJoin the NetworkGet StartedSubscribeSupportContact
Search
Close

New Jersey Appellate Court finds Arbitration Clause Enforceable

By Adam J. Siegelheim on July 11, 2007
Email this postTweet this postLike this postShare this post on LinkedIn

In the recent decision, Allen v. World Inspection Network, Int’l, Inc., 389 N.J.Super. 115, 911 A.2d 484 (App. Div. 2006), the New Jersey appellate division held that a franchise agreement provision-requiring that all disputes be arbitrated in the State of Washington- was enforceable.   

Prior to this decision, the New Jersey Supreme Court held that forum-selection clauses in franchise agreements are presumptively invalid, and should not be enforced. Kubis & Perszyk Assocs. v. Sun Microsystems, 146 N.J. 176 (1996).   The Supreme Court’s rational was based, in part, on the presumption that forum-selection clauses are unfairly imposed on the franchisee, as a result of the franchisor’s superior bargaining position.  However, the Allen Court distinguished the Kubis ruling, on the basis that arbitration clauses are governed by the Federal Arbitration Act, which preempts New Jersey law.  

Significantly, the Allen court also rejected the franchisee’s argument that even if the arbitration clause is enforceable, the court could require the parties to arbitrate their claims, but not enforce the portion of the provision which required the parties to arbitrate in Washington.   In rejecting this argument, the court concluded that the location of the arbitration was also an integral part of the arbitration clause and was therefore also governed by the Federal Arbitration Act.  

As noted in a prior blog posting, the United States District Court had also considered this issue and reached the same conclusions. 

Photo of Adam J. Siegelheim Adam J. Siegelheim

Adam J. Siegelheim is a Shareholder and member of the Business & Corporate and Franchise Groups. Mr. Siegelheim’s practice includes the representation of companies and non-profit organizations on a variety of issues including entity formation, financing, intellectual property, real estate, mergers and acquisitions…

Adam J. Siegelheim is a Shareholder and member of the Business & Corporate and Franchise Groups. Mr. Siegelheim’s practice includes the representation of companies and non-profit organizations on a variety of issues including entity formation, financing, intellectual property, real estate, mergers and acquisitions, and insurance coverage matters.

Read more about Adam J. SiegelheimEmail
Show more Show less
  • Posted in:
    Business and Commercial
  • Blog:
    New Jersey Law Blog
  • Organization:
    Stark & Stark
  • Article: View Original Source

Call us at 1-800-913-0988 or email sales@lexblog.com.

Facebook LinkedIn Twitter RSS
The Library at LexBlog
  • About LexBlog
  • The Field We Built
  • Library at LexBlog
  • Our Beliefs
  • Our Team
  • Contact LexBlog
  • Disclaimer
  • Editorial Policy
  • Terms of Service
  • Get Started
  • Publishing Solutions
  • Compass
  • Submit a Request
  • Support Center
  • System Status
Copyright © 2026, LexBlog, Inc. All Rights Reserved.
Law blog design & platform by LexBlog LexBlog Logo