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ENFORCE OR AVOID ARBITRATION AGREEMENTS IN TEXAS?

Is your dispute subject to arbitration? To determine the answer, you must examine two issues:

(1)  Is there a valid agreement to arbitrate?

(2) Does the dispute in question fall within the scope of that arbitration agreement?

Carey v. 24 Hour Fitness, USA, Inc., No. 10-20845, __F.3d __ (5th Cir. 2012); In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex.2005).

What are the procedural questions affecting whether arbitration should go forward? An arbitrator should decide in the questions involving:  compliance with notice, time limits, and similar prerequisites to compelling arbitration. Howsam v. Dean Witter Reynolds Inc., 537 U.S. 79, 83-85 (2002).

Regardless, the Supreme Court has explained that parties may agree to arbitrate "gateway" issues like whether parties have agreed to arbitrate or whether their agreement covers a particular controversy. But the parties must clearly and unmistakably agree to delegate such gateway issues to an arbitrator. Rent-A-Center West, Inc. v. Jackson, 130 S. Ct. 2772, 2777-78 (2010). Texas courts have reached the same result. Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 61 (Tex. 2008); Haddock v. Quinn, 287 S.W.3d158 (Tex. App. - Fort Worth 2009, no pet.). The validity of such an agreement to arbitrate (whether it is legally binding, as opposed to whether it was in fact agreed to) is an issue that a court must address. Rent-a-Center, 130 S. Ct. at 2778.

"Absent fraud, misrepresentation, or deceit, a party is bound by the terms of the contract he signed, regardless of whether he read it or thought it had different terms." In re McKinney, 167 S.W.3d 833 (Tex. 2005).

There is no specific requirement that an arbitration agreement be signed, so long as it is written and agreed to by the parties. See 9 U.S.C. § 3; Tex. Civ. Prac. & Rem. Code § 171.001(a); In re AdvancePCS Health L.P., 172 S.W.3d 603, 606 (Tex. 2005).

Here is an important note: There is no requirement that an arbitration clause appear in each contract that may be covered by an agreement to arbitrate. If the parties agree to arbitrate a given dispute, it does not matter where that agreement is written. See, In re AdvancePCS Health L.P., 172 S.W.3d 603, 606 (Tex. 2005).  An exception exists under the TAA for contracts of less than $50,000 and for personal injury claims. Tex. Civ. Prac. & Rem. Code § 171.002.

  Article By Richard Weaver

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