Georgia Supreme Court Rejects Right to Appeal Denial of Arbitration Motion

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The Georgia Supreme Court held last week that an order denying a motion to compel arbitration is not directly appealable by a party seeking to enforce an arbitration provision. American General Financial Services v. Jape, 2012 WL 4475691 (Ga. Sup. Ct. Oct. 1, 2012). With the Jape decision, Georgia joins a growing number of states — including Arizona, Louisiana, Maryland, Massachusetts, and Oregon — that have ruled that the direct appeal provision of the Federal Arbitration Act (FAA), 9 U.S.C. § 16(a)(1)(B), does not preempt state procedural rules restricting interlocutory appeals...

.. In these states, parties therefore face the prospect of litigating their claims in a judicial forum, through trial and final judgment, and only then having a right to appeal an order denying a motion to compel arbitration. Recognizing the potential for delay and inefficiency that its decision creates, the Jape court urged Georgia trial courts to certify for immediate review orders denying a motion to compel arbitration. This encouragement, however, may be of little help to parties in forums biased against arbitration.

In Jape, American General Financial Services filed suit to recover money due under a loan agreement. The borrower counterclaimed for breach of contract, and American General moved to compel arbitration of only the borrower’s counterclaim. The trial court denied the motion to compel. Pursuant to Georgia’s interlocutory appeal statute, O.C.G.A. § 5-6-34(b), American General requested certification by the trial court of an immediate appeal, which the trial court also denied. On direct appeal to the Georgia Court of Appeals, the Court of Appeals held that it was without jurisdiction to hear the appeal, given American General’s failure to receive certification from the trial court pursuant to the interlocutory appeal statute.

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