Commerce Clause. In 1957, Rhodes and several other Georgia landowners entered into a sixty-five-year timber purchase contract with Inland-Rome, Inc Thereafter, Inland-Rome cut timber from the landowners' land and then removed it for processing in

Question

certain Georgia facilities, after which it was shipped as lumber products to points throughout the country. In 1986, the landowners claimed that Inland-Rome had breached the contract, and they filed suit. Inland-Rome moved to compel arbitration because the parties had agreed, in their contract, to arbitrate any disputes arising thereunder. Georgia law enforces arbitration clauses only if they are contained in construction contracts. Arbitration clauses are enforceable under the Federal Arbitration Act only if the contracts in which they appear affect interstate commerce. Inland-Rome contended that because lumber products from the cut timber were shipped throughout the nation, the contract related to interstate commerce, and therefore the Federal Arbitration Act should apply. Will the court agree? Discuss.

Answer 1

Commerce clause
The court did not agree with Inland-Rome that the contract related to interstate commerce. Therefore, the Federal Arbitration Act did not apply and the arbitration clause was not enforceable. The court found that the contract between the parties did not in itself relate to the interstate shipment of any product. "To the contrary," the court stated, "it relates solely to the sale of standing timber located exclusively in Georgia." Interstate commerce was affected but only after Inland-Rome's performance under the contract with the landowners was completed. Therefore, federal law did not apply, and the contract was subject to Georgia law. The state of Georgia enforced arbitration clauses, but only if they were contained in construction contracts. Therefore, arbitration of the contract could not be compelled.