A North Carolina federal court held that the Federal Arbitration Act (FAA) preempted a North Carolina arbitration law which restricts choice of venue.

In Aspen Spa Properties, LLC v. International Design Concepts, LLC, No. 5:07-CV-371-D, 2007 WL 4355523 (E.D.N.C. Dec. 12, 2007), Aspen hired IDC to design its spa and plastic surgery facility in North Carolina. Aspen became unhappy with IDC's work and filed suit in state court. IDC moved to dismiss or, alternatively, to transfer the action based on a forum selection clause in the arbitration agreement between the parties to the United States District Court for the Western District of Washington.

The state court rejected Aspen's assertion that the appropriate test for enforcement of the forum selection clause was that provided under 28 U.S.C. § 1404(a). Because the clause was contained within an arbitration agreement; its enforceability must be analyzed under the FAA. See Sam Reisfield & Son Import Co. v. S.A. Eteco, 530 F.2d 679, 680-81 (5th Cir. 1976); Goldstein v. Am. Steel Span, Inc., 640 S.E.2d. 2d 740, 743 (N.C. Ct. App. 2007).

This Court held that Aspen did not present sufficient legal or equitable grounds, typically "classic state-law contract defenses" to revoke the arbitration agreement. See 9 U.S.C. § 2. Although Aspen cited a North Carolina statute which makes forum selection clauses in contractual arbitration agreements unenforceable, it conceded that the FAA preempted the North Carolina statute. See N.C. Gen. State § 22B-3; Doctor's Assocs., Inc. v. Casarotto, 134 L.Ed.2d 902 (1996).

Moreover, because the case was removed to this Court, the Court "need not resolve whether venue is proper…under 28 U.S.C. § 1441(a)." Regardless of the propriety of this venue, this Court had discretion to transfer or dismiss the action under 28 U.S.C. § 1406(a).

Noting the FAA's requirement that both forum selection clauses and arbitration agreements be enforced and the impending action to compel arbitration in the Western District of Washington, this Court transferred the instant case in accordance with the forum selection clause.