Originally from:

Journal of American Arbitration (JAA) - Vol. 2, No. 2

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ARTICLES

The United States Supreme Court Enforces
Arbitration Clause in Debt-Restructuring
Agreement because it “Involved Commerce” in
Citizens Bank v. Alafabco, Inc.
By Wm. Bartlett Gabler

I. OVERVIEW
Citizens Bank sought to compel the arbitration of a financial dispute
with Alafabco Inc. that arose out of a series of commercial loan
transactions.1 In 1986, Citizens Bank, an Alabama lending institution,
entered into a quasi-contract with Alafabco Inc., an Alabama fabrication
and construction company, to provide the company with operating
capital sufficient to secure and complete construction contracts.2
Alafabco bid on a large construction project in 1998, however, the
company did not possess sufficient funds to complete the project.3
Alafabco, therefore, had to complete the construction project using debt
repayment funds entitled to Citizens Bank.4 As a result, Alafabco
became delinquent in repaying its obligations to the bank.5