By: Kyle Yager, ALR Senior Editor, 2021
Arbitration is one of the most commonly used forms of alternate dispute resolution in the U.S.[1] However, despite its commonality, some of the developed rules surrounding arbitration are rather unexpected. Accordingly, I have provided a short list briefly detailing some of the most unusual rulings from arbitration cases in the U.S.
First, in Dealer Computer Servs. v. Michael Motor Co., the Fifth Circuit Court of Appeals held that parties must preserve any basis for vacatur by objecting during the arbitration proceedings.[2] Essentially, the court held that a party interested in appealing an arbitral award based on arbitrator bias must first inform the arbitrator herself that they believe she is biased.[3] This certainly creates somewhat of a Catch-22 for arbitration parties who are concerned about bias of the arbitrator.
Second, in KPMG LLP v. Cocchi, the Supreme Court of the United States (“SCOTUS”) held that when a dispute presents some arbitrable claims and some nonarbitrable claims, the arbitrable claims must be arbitrated even if the result will lead to piecemeal litigation.[4] In its per curiam decision, SCOTUS reconciled the issue presented with the Federal Arbitration Act (the “Act”).[5] SCOTUS explained that “when a complaint contains both arbitrable and nonarbitrable claims, the Act requires courts to ‘compel arbitration of pendent arbitrable claims when one of the parties files a motion to compel, even where the result would be the possibly inefficient maintenance of separate proceedings in different forums.’”[6]
Lastly, in Buckeye Check Cashing, Inc. v. Cardegna, SCOTUS held that an arbitration clause is severable from the rest of the contract. [7] In so doing, SCOTUS explained that an arbitration clause in an unenforceable contract must, itself, be enforced unless the challenging party challenges the arbitration clause itself.[8] SCOTUS continued its analysis by explaining that, because the challenge was brought against the contract at large and not the arbitration clause itself, the arbitrator was the real decision making authority on the issue.[9]
These three cases represent some of the more surprising rulings in arbitration case law. Sometimes what may seem intuitive in arbitration is actually quite the opposite. Notably, this is not a comprehensive list, nor based on any sort of data set, and there are certainly many more unconventional results in arbitration cases throughout the U.S.
[1]. See Tala Esmaili & Krystyna Blokhina Gilkis, Alternative Dispute Resolution, Cornell Law School (June 8, 2017), https://www.law.cornell.edu/wex/alternative_dispute_resolution.
[2]. Dealer Computer Servs. v. Michael Motor Co., 485 Fed. Appx. 724, 727 (5th Cir. 2012).
[3]. See id.
[4]. See KPMG LLP v. Cocchi, 565 U.S. 18, 22 (2011).
[5]. See id. at 19.
[6]. Id. at 22.
[7]. Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445 (2006).
[8]. Id. at 445–446.
[9]. Id. at 446