Don't Forget To Select Your Arbitrator

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Explore:  Arbitration Arbitrators

In HM DG, Inc. v. Amini, the California Court of Appeal for the Second Appellate District held that an arbitration clause was enforceable even though it did not specify the agency to arbitrate the dispute or otherwise provide for a method of selecting an arbitrator. 

The underlying dispute involved the quality of work on an upscale home remodel. The arbitration clause at issue recited multiple possible alternatives for selecting an arbitrator, but the parties did not agree upon any given method. 

The defendant filed a motion to compel arbitration pursuant to the parties’ contract, but the trial court held that the arbitration clause was unenforceable because it was uncertain as to the arbitrator. The court therefore determined that there was a lack of consent between the parties to arbitrate their dispute.

The California Court of Appeal reversed based on the plain language of California Code of Civil Procedure Section 1281.6. Under that section, a party can petition the court to appoint an arbitrator where the contract lacks an agreed upon method to select an arbitrator or if the agreed upon method fails for any reason.  

The appellate court therefore held that,

the presence of multiple alternative methods for selecting an arbitrator in the Arbitration Clause does not render the clause invalid or unenforceable.” 

Rather, under those circumstances, any party to the contract can petition the court to appoint an arbitrator. 

Amini cautions that the failure to select an arbitrator leaves the arbitrator’s selection open to the court. To avoid that result, contracting parties should ensure that their arbitration clauses either identify an arbitration agency and/or a method for selecting an arbitrator.

 

Topics:  Arbitration, Arbitrators

Published In: Alternative Dispute Resolution (ADR) Updates, Civil Procedure Updates, General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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