Minnesota Keeps Legislating Against Forced Arbitration. The Honest Question Is How Much of It Survives the FAA.

Minnesota has taken three separate runs at the problem of dispute resolution imposed by the stronger party. It adopted a modern arbitration act. It voided out-of-state forum clauses in construction contracts. It voided out-of-state adjudication clauses in employment agreements containing non-competes.

Two of those three statutes use the word “arbitration” by name. That is the fact that decides how much of Minnesota’s policy is actually enforceable, because the Federal Arbitration Act’s central rule is not that arbitration must be favored — it is that arbitration may not be singled out for disfavor.

What follows is a map, not a verdict: ground the state clearly still holds, ground it has already lost, and ground where the question is genuinely open. We have not found a Minnesota or Eighth Circuit decision resolving the two contested questions below. Anyone who tells you they know the answer is guessing.

The federal rule, stated precisely

Section 2 of the FAA is the whole fight. It provides that a written arbitration provision in a maritime transaction or “a contract evidencing a transaction involving commerce”

shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract or as otherwise provided in chapter 4.

9 U.S.C. § 2. (The closing clause is new: Congress added “or as otherwise provided in chapter 4” in 2022, when it carved sexual-assault and sexual-harassment claims out of pre-dispute arbitration.)

The Supreme Court reads that sentence as an equal-treatment command. In Kindred Nursing Centers L.P. v. Clark, 581 U.S. 246 (2017), the Court put it this way:

That statutory provision establishes an equal-treatment principle: A court may invalidate an arbitration agreement based on “generally applicable contract defenses” like fraud or unconscionability, but not on legal rules that “apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.”

And the Court closed the obvious workaround in the same paragraph: the FAA “also displaces any rule that covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements.”

A statute that says “arbitration” out loud starts this fight on the back foot. That is the lesson of Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681 (1996), which struck down a Montana law requiring notice of an arbitration clause on the first page of a contract:

We hold that Montana’s first page notice requirement, which governs not “any contract,” but specifically and solely contracts “subject to arbitration,” conflicts with the FAA and is therefore displaced by the federal measure.

Solid ground: what Minnesota unquestionably still controls

Minnesota’s arbitration act does not conflict with the FAA, because it was written to mirror it. The Revised Uniform Arbitration Act, Minn. Stat. ch. 572B, governs agreements to arbitrate entered into on or after August 1, 2011, and — under § 572B.03(b) — governs from that date forward “even if the arbitration agreement was entered into prior to August 1, 2011.”

Compare the two enforceability provisions. Minn. Stat. § 572B.06(a):

An agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of contract.

That is 9 U.S.C. § 2, in Minnesota’s words. Nothing to preempt.

The vacatur grounds line up too. Minn. Stat. § 572B.23(a) permits vacatur where the award was procured by “corruption, fraud, or other undue means,” where there was evident partiality or corruption by an arbitrator, where an arbitrator refused to postpone or to consider material evidence, where “an arbitrator exceeded the arbitrator’s powers,” where there was no agreement to arbitrate, or where notice was defective. Those grounds track 9 U.S.C. § 10(a) closely enough that a party rarely has to choose. Minnesota adds a hard 90-day filing deadline in § 572B.23(b) — a real trap, and one worth calendaring the day the award arrives.

And where the parties choose Minnesota’s arbitration rules, the FAA enforces that choice rather than overriding it. Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468 (1989):

Just as they may limit by contract the issues which they will arbitrate, so too may they specify by contract the rules under which that arbitration will be conducted. Where, as here, the parties have agreed to abide by state rules of arbitration, enforcing those rules according to the terms of the agreement is fully consistent with the goals of the FAA, even if the result is that arbitration is stayed where the Act would otherwise permit it to go forward.

That is a larger opening than most drafters use. A Minnesota choice-of-law clause that expressly adopts chapter 572B as the governing arbitration procedure is not an anti-arbitration provision. It is a contract term, and Volt says it gets enforced.

Ground the state has already lost

A state may not require a judicial forum for a claim the parties agreed to arbitrate. Southland Corp. v. Keating, 465 U.S. 1 (1984), held that in enacting § 2 Congress “withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration” — language the Court repeated in Volt and the Fifth Circuit applied in the case discussed below. Whatever one thinks of Southland as a matter of 1925 legislative history — and the criticism is substantial — it is the law.

A state may not impose formalities on arbitration clauses that it does not impose on contracts generally. Casarotto, above.

“Involving commerce” is not a meaningful escape hatch. In Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995), the Court read the phrase “as broadly as the words ‘affecting commerce,’” describing the Act’s reach as “coinciding with that of the Commerce Clause.” A construction subcontract for a Minnesota building, funded through national lenders, using materials shipped across state lines, is very likely inside the FAA. Planning around the theory that your deal is purely local is planning around a narrow exception.

Contested ground 1: the construction forum statute

Minn. Stat. § 337.10, subd. 1 is short and blunt:

Provisions contained in, or executed in connection with, a building and construction contract to be performed in Minnesota making the contract subject to the laws of another state or requiring that any litigation, arbitration, or other dispute resolution process on the contract occur in another state are void and unenforceable.

We have written before about the five clauses chapter 337 voids. The subdivision does real work: for a Minnesota project, a national contractor’s Texas-forum, Texas-law form does not do what it says.

Except that Louisiana had a nearly identical statute, and the Fifth Circuit held it preempted. La. Rev. Stat. Ann. § 9:2779 declared “null and void and unenforceable as against public policy” any construction-contract provision requiring “a suit or arbitration proceeding to be brought in a forum or jurisdiction outside of this state.” In OPE International LP v. Chet Morrison Contractors, Inc., 258 F.3d 443 (5th Cir. 2001), the court wrote:

The statute directly conflicts with § 2 of the FAA because the Louisiana statute conditions the enforceability of arbitration agreements on selection of a Louisiana forum; a requirement not applicable to contracts generally.

Id. at 447. The court affirmed an order compelling a Louisiana subcontractor to arbitrate in Houston.

The counterargument, which is not frivolous. Minnesota’s statute is not confined to arbitration. It reaches “litigation, arbitration, or other dispute resolution process” in a single breath, and it independently voids out-of-state choice of law. A rule that treats a Texas courtroom and a Texas arbitration exactly alike is not obviously a rule that “singles out arbitration agreements for disfavored treatment” in Kindred’s sense. It is a venue rule with even-handed coverage.

The counter-counterargument. Kindred also reaches rules that disfavor “contracts that … have the defining features of arbitration agreements,” and Casarotto focused on whether the state rule “governs not ‘any contract’” but a defined subset. Section 337.10, subd. 1, governs one industry’s contracts, names arbitration inside that subset, and does so in a way that in practice bites hardest on arbitration clauses — because that is where out-of-state forum selection actually lives in construction forms.

We have found no Minnesota appellate decision and no Eighth Circuit decision resolving this. A contractor relying on § 337.10, subd. 1, to defeat an out-of-state arbitration clause should expect a preemption motion and should have an answer ready before filing.

Contested ground 2: the non-compete venue provision

Minnesota’s non-compete ban, Minn. Stat. § 181.988, carries a companion venue and choice-of-law rule. Subdivision 3(a) bars an employer from requiring an employee “who primarily resides and works in Minnesota,” as a condition of employment, to agree to a provision that would “require the employee to adjudicate outside of Minnesota a claim arising in Minnesota” or “deprive the employee of the substantive protection of Minnesota law with respect to a controversy arising in Minnesota.” Such a provision is voidable at the employee’s election, and on voiding, “the matter shall be adjudicated in Minnesota and Minnesota law shall govern the dispute.” Subd. 3(b).

Then subdivision 3(d) says the quiet part out loud:

For purposes of this section, adjudication includes litigation and arbitration.

That single sentence is what makes the provision effective and what makes it vulnerable. Without it, an employer would argue the statute governs courts only. With it, the statute expressly reaches arbitration agreements — which is the Casarotto posture.

The nearest analogue was struck down. In Chamber of Commerce v. Bonta, No. 20-15291 (9th Cir. Feb. 15, 2023), the Ninth Circuit considered California’s AB 51, which penalized employers for requiring arbitration agreements as a condition of employment. The court framed and answered the question this way:

This appeal raises the question whether the FAA preempts a state rule that discriminates against the formation of an arbitration agreement, even if that agreement is ultimately enforceable. We hold that such a rule is preempted by the FAA.

But § 181.988, subd. 3, is a materially different animal, and the differences may matter. AB 51 attached penalties to the act of requiring arbitration at all. Subdivision 3 does not prohibit arbitration; it prohibits requiring adjudication outside Minnesota and prohibits stripping Minnesota substantive law. It applies “only to claims arising under this section” — subd. 3(e) — which is to say, only to a claim created by the same statute. A state defining the enforcement terms of its own statutory right is on different footing from a state regulating arbitration generally.

Two practical limits belong in the same breath, because they defeat more claims than preemption does. The subdivision reaches only an employee who primarily resides and works in Minnesota — conjunctive. And subd. 3(e) confines it to claims under § 181.988. A wage claim or an NDA claim under the same contract is not covered.

Settled ground: who decides whether the dispute is arbitrable — Minnesota answered this in 2021

Minn. Stat. § 572B.06(b) states a flat rule:

The court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate, except in the case of a grievance arising under a collective bargaining agreement when an arbitrator shall decide.

Federal law says the opposite where the parties have contracted for it. In Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63 (2019), the Court held that the FAA contains no “wholly groundless” exception and that “[w]hen the parties’ contract delegates the arbitrability question to an arbitrator, the courts must respect the parties’ decision as embodied in the contract.” Incorporating a provider’s rules — the AAA rules, for instance — is the ordinary way parties do that.

The Minnesota Supreme Court has answered this, and the answer removes most of the apparent conflict. In Glacier Park Iron Ore Properties, LLC v. United States Steel Corp., No. A19-1923 (Minn. June 30, 2021), the court held, in the first paragraph of its syllabus:

Unless clear and unmistakable evidence shows that the parties intended to delegate the issue to an arbitrator, the court, not the arbitrator, decides whether a dispute governed by the Federal Arbitration Act is arbitrable.

The court reached that result through federal law — applying the clear-and-unmistakable standard of First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943–44 (1995) — and noted in a footnote that Minn. Stat. § 572B.06 is in accord. State and federal law point the same direction: courts decide arbitrability by default, arbitrators decide it only where the parties clearly and unmistakably said so.

One question the court expressly left open. The court of appeals had held that by adopting the Minnesota Revised Uniform Arbitration Act in 2010 the Legislature effectively superseded prior Minnesota law on this point. Glacier Park Iron Ore Props., LLC v. U.S. Steel Corp., 948 N.W.2d 686, 692–93 (Minn. App. 2020). The Supreme Court wrote that it “need not resolve this statutory interpretation question.” It remains unresolved.

Chapter 572B’s own text points the same way on variance. Section 572B.04(a) lets parties “waive or vary the requirements of sections 572B.01 to 572B.31 to the extent permitted by law,” subject to two lists of exceptions. The pre-dispute list at § 572B.04(b)(1) protects “572B.06, subsection (a)” — not subsection (b). The absolute list at § 572B.04(c) does not mention § 572B.06 at all. Read with Glacier Park, the statute contemplates that parties may send arbitrability to the arbitrator if they say so plainly.

The drafting lesson is concrete, and it is the same under either body of law: if you want the arbitrator to decide arbitrability in a Minnesota contract, say so in the clause, in terms. Do not assume that incorporating a provider’s rules by reference will carry that weight.

The map, in one table

What to do about it

If you are relying on a Minnesota statute to avoid an out-of-state arbitration:

1. Do not treat the statute as self-executing. Section 337.10, subd. 1, and § 181.988, subd. 3, are the beginning of a preemption argument, not the end of one.
2. Check whether the FAA reaches the contract at all. Under Allied-Bruce, it usually does — but “usually” is not “always,” and a genuinely intrastate transaction is a different case.
3. Pick your forum first, then your argument. Where the motion to compel is filed, and under which circuit’s law, may matter more than the statute.
4. Preserve the generally applicable defenses. Unconscionability, fraud, and lack of formation survive § 2 by its own terms. They are not preempted, because they apply to every contract.

If you are drafting a Minnesota contract:

1. State the arbitral seat in Minnesota for Minnesota construction work. A Texas seat in a Minnesota project contract buys you a threshold fight worth more than the clause.
2. Say who decides arbitrability, expressly, in the clause itself.
3. Adopt chapter 572B by name if you want Minnesota arbitration procedure. Volt makes that choice enforceable; silence does not.
4. Calendar 90 days from receipt of any award under § 572B.23(b), before anyone starts arguing about whether to challenge it.

The observation

Minnesota’s arbitration policy is not one policy. It is two, pointing in opposite directions.

Chapter 572B is a pro-arbitration statute — it makes agreements enforceable, keeps courts out of the merits, and gives awards near-final effect. Sections 337.10 and 181.988 are anti-forced-arbitration statutes, aimed at the party who wrote the clause. The state is comfortable with arbitration chosen and uncomfortable with arbitration imposed.

The FAA does not recognize that distinction. It asks a single question — is arbitration being treated worse than other contract terms — and it asks it without regard to who had the bargaining power. That is the structural mismatch, and it is why the Legislature keeps returning to the subject. Every few sessions Minnesota writes another provision naming arbitration, and every such provision buys a preemption question along with the protection.

Which means the practical advice is unromantic. Where Minnesota’s protection is contested, do not build the case on it alone. Build it on the defenses § 2 preserves by its own terms — the ones that apply to every contract in the state, and are therefore the ones no preemption argument can reach.

For the parallel federal story — how a 1925 merchants’ statute became a consumer and employment regime — see our piece on the FAA. For the transportation-worker exemption that takes some workers out of the Act entirely, see Flowers Foods v. Brock.

Madgett Law, LLC advises Minnesota businesses, contractors, and employees on arbitration clauses — whether one binds you, where it must be conducted, who decides that question, and what remains of an award once it is issued. If a clause is being asserted against you, send us a message or call 612-470-6529.

Sources: Minn. Stat. § 572B.03 (when act applies), § 572B.04 (effect of agreement to arbitrate; nonwaivable provisions — subsections (a), (b)(1), and (c)), § 572B.06 (validity of agreement to arbitrate — subsections (a), (b), and (c)), § 572B.07 (motion to compel or stay arbitration), and § 572B.23 (vacating award — subsection (a) grounds and the 90-day deadline in subsection (b)); Minn. Stat. § 337.10, subd. 1 (out-of-state law and out-of-state litigation, arbitration, or other dispute resolution void for construction contracts to be performed in Minnesota) and § 337.01, subd. 2 (definition of “building and construction contract”); Minn. Stat. § 181.988, subd. 3 (choice of law; venue — paragraphs (a), (b), (d), and (e)) — all from the Minnesota Office of the Revisor of Statutes, 2025 Minnesota Statutes. Chapters 572B and 337 and § 181.988 were not amended in the 2025 or 2026 legislative sessions (Revisor Table 2, Statutes Changed). 9 U.S.C. § 2 and 9 U.S.C. § 10 (Cornell Legal Information Institute). Kindred Nursing Centers L.P. v. Clark, 581 U.S. 246 (2017); Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681 (1996); Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468 (1989); Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995); Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63 (2019); First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943-44 (1995) (Cornell Legal Information Institute). Glacier Park Iron Ore Properties, LLC v. United States Steel Corp., No. A19-1923 (Minn. June 30, 2021) (the court, not the arbitrator, decides arbitrability under the Federal Arbitration Act absent clear and unmistakable evidence of a delegation; Minn. Stat. Sec. 572B.06 noted to be in accord; the court expressly declined to resolve whether the Minnesota Revised Uniform Arbitration Act superseded prior Minnesota law), aff’g 948 N.W.2d 686 (Minn. App. 2020) (opinion retrieved from the Minnesota Judicial Branch’s published opinion archive; no North Western Reporter citation is given for the supreme court decision because none was verified). Southland Corp. v. Keating, 465 U.S. 1, 10 (1984), as quoted in Volt and in OPE International. OPE International LP v. Chet Morrison Contractors, Inc., 258 F.3d 443, 447 (5th Cir. 2001) (Caselaw Access Project). Chamber of Commerce v. Bonta, No. 20-15291 (9th Cir. Feb. 15, 2023) (official slip opinion, Ninth Circuit).

This article is general legal information about Minnesota and federal law, not legal advice, and reading it does not create an attorney–client relationship. The preemption questions described here are unresolved in Minnesota; nothing here predicts how any court would rule on any particular clause. Whether the Federal Arbitration Act reaches a given contract, and whether a particular provision is enforceable, depends on the contract’s terms and the facts of the transaction. No outcome is promised or implied.