Too Late to Arbitrate: Seventh Circuit Holds That Litigation Delay Waived Arbitration Rights Despite a Contractual No-Waiver Clause
Our September 8 e-alert addressed the Third Circuit’s recent opinion concluding that litigation activity alone does not necessarily waive a party’s right to arbitrate. The Seventh Circuit has now addressed the other side of the equation, clarifying when litigation conduct does constitute waiver.
In Village of Schaumburg, Illinois v. Permasteelisa North America Corp., Case No. 24-1168 (7th Cir. Aug. 18, 2026), the court affirmed a finding that a plaintiff waived any right to arbitrate by filing suit and waiting several months before seeking arbitration. It then held that an express contractual no-waiver clause could not save the plaintiff’s right to arbitrate.
Key Takeaway
A party that delays invoking arbitration after choosing to litigate may waive its arbitration rights, and a contractual no-waiver provision may not prevent that result in federal court.
Why Waiver Existed
The dispute arose from allegedly defective construction work performed for the Village. The Village sued multiple entities in February 2022 over alleged construction defects and later added subcontractor Permasteelisa North America Corp. as a defendant in November 2022.
The Village did not request arbitration in its complaint or advise Permasteelisa before filing suit that it intended to pursue arbitration. After Permasteelisa moved to dismiss, the Village still did not seek an arbitral referral. Instead, it waited until approximately eight months after adding Permasteelisa as a defendant to ask the district court to send the dispute to arbitration.
The parties disputed whether the Village had a right to arbitrate, as the arbitration clause existed in a contract between Permasteelisa and the general contractor, and not in a contract with the Village directly. But neither the trial court nor the Seventh Circuit reached that decision because they both concluded that, even assuming the Village had acquired a right to arbitrate, the Village’s litigation conduct waived that right.
The court’s analysis revolved entirely around timing: the eight-month delay constituted waiver. Neither the absence of prejudice to Permasteelisa nor the Village’s concerns about preserving its claims against a limitations defense was sufficient to excuse the delay. The court held that the Village could still have requested arbitration when it filed or, at the latest, when Permasteelisa moved to dismiss. Its failure to do so supported the district court’s conclusion that the Village’s later request was inconsistent with its earlier choice to litigate.
The No-Waiver Clause Did Not Alter the Result
The Village relied on a no-waiver clause which stated, among other things, that a party’s failure to exercise a contractual right would not be construed as a waiver or relinquishment of that right with respect to future performance. Again, whether the Village could take advantage of that provision was disputed, but it did not matter because the Seventh Circuit ultimately held that the provision could not change the outcome.
The court drew a clear line between contractual rights and litigation conduct. Although parties may agree that contractual rights are not waived before litigation begins, they cannot contract around federal procedural rules once a case is in court.
In reaching that conclusion, the Seventh Circuit aligned itself with decisions from the Second, Third, Fifth, and Sixth Circuits holding that contractual no-waiver provisions do not restrict a federal court’s authority to find waiver based on delay or strategic conduct during litigation.
Practical Implications
The key lesson is simple: if arbitration may apply, raise it early. Parties should identify the governing arbitration agreement, evaluate who may enforce it, and assert the right promptly. Waiting while the court considers dispositive relief may be sufficient to waive arbitration, even without a ruling on the merits or a showing of prejudice. And counsel should not assume that broadly drafted no-waiver language permits a party to defer its arbitration demand while testing the litigation forum.
If you have questions about arbitration or how best to protect and enforce your arbitration rights, feel free to contact the authors, who are members of Miller Canfield’s International Disputes Group, or your Miller Canfield attorney.
