Suppose you’re a New Jersey subcontractor on a New Jersey project, where the project owner is based in New York and the prime contractor in Wisconsin. Suppose in addition that you sign a subcontract calling for disputes to be resolved by arbitration in Wisconsin. And suppose further that once a dispute arises you consider Wisconsin to be an inconvenient place for the arbitration. Will a New Jersey court agree? Don’t count on it.
A federal court, in the case of Hautz Construction, LLC v. H&M Department Store, 2013 U.S. Dist. LEXIS 12215 (N.J., Jan. 28, 2013), has just confirmed that trial venue clauses will normally be upheld. The current decision is located here (subscription required). A prior decision in the same case and on the same issue can be read here.
It is common for both project owners and contractors involved in capital facility projects throughout the country to have venue clauses in their standard contract forms that identify a particular state for any trial, whether in arbitration or in the court system. The New Jersey court decision follows the prevailing rule, and is a reminder to those signing such contracts that they may be compelled to resolve their disputes in an inconvenient location far, far away from their base of operations. There can be exceptions, but this is the normal rule. Thus, a Massachusetts contractor on a New Hampshire project can find itself obligated to arbitrate in Seattle (an actual case, although there's no published decision). So if you’re in New Jersey and don’t want to go to trial in Wisconsin (or vice versa), deal with that issue before you sign the contract!