THE ARBITRATION PROVISION SHOULD DICTATE WHETHER JUDGE OR ARBITRATOR DECIDES ARBITRABILITY OF ISSUE

An arbitration provision should specifically dictate whether you want a judge or arbitrator to decide the arbitrability of a claim or issue.  The reality is, if you prefer your disputes to be resolved by arbitration, you should dictate that the arbitrator decides the arbitrability of issues or claims.  This way the party opposing arbitration cannot try to circumvent this by having the judge decide, potentially altering the forum for disputes, and otherwise slowing down the dispute resolution process.   The recent case discussed below highlights why specifying who decides the arbitrability of a claim or issue is worthy.

In Doe v. Natt, 45 Fla. L. Weekly D712a (Fla. 2d DCA 2020), involving an arbitration agreement in an Airbnb clickwrap agreement, the matter at-issue was who decides whether a dispute is arbitrable, i.e., subject to the arbitration provision, a judge or the arbitrator.  (A clickwrap agreement is an online agreement we enter into with a company that requires us to click “I agree” boxes to proceed.  We have all entered into one.)    The arbitration provision required the parties to proceed to arbitration with the American Arbitration Association (“AAA”):

Arbitration Rules and Governing Law. The arbitration will be administered by the American Arbitration Association (“AAA”) in accordance with the Commercial Arbitration Rules and the Supplementary Procedures for Consumer Related Disputes (the “AAA Rules”) then in effect, except as modified by this Dispute Resolution section. (The AAA Rules are available at www.adr.org/arb_med or by calling the AAA at 1-800-778-7879.) The Federal Arbitration Act will govern the interpretation and enforcement of this section.

AAA’s rules (whether dealing with a commercial or construction dispute) provide, “The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement or the arbitrability of any claim or counterclaim.”  In other words, the arbitrator determines the arbitrability of a claim.

However, the Second District Court of Appeal focused on the fact that the arbitration provision at-issue did not specifically state the arbitrator is to decide issues of arbitrability and AAA’s rules were not attached to the clickwrap agreement. And, while other appellate courts that have found that an arbitrator determines arbitrability when AAA’s rules have been incorporated by reference into an arbitration provision, the Second District disagreed with those holdings finding that generally incorporating AAA’s rules was too general and ambiguous as to who decides the arbitrability of a dispute:

We hold that the clickwrap agreement’s arbitration provision and the AAA rule it references that addresses an arbitrator’s authority to decide arbitrability did not, in themselves, arise to “clear and unmistakable” evidence that the parties intended to remove the court’s presumed authority to decide such questions. The evidence on what these parties may have agreed to about the “who decides” arbitrability question was ambiguous; therefore, the court retained its presumed authority to decide the arbitrability dispute.

Doe, supra.

To avoid this generality or ambiguity, and arbitration provision should unmistakably dictate whether a judge or arbitrator decides the arbitrability of a claim or issue.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

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