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Understanding Arbitrability

We sign contracts with arbitration clauses all the time. Many employment contracts and commercial agreements have arbitration clauses within them. If you find yourself in a position where you need to sue, you may be required to arbitrate the cause instead of taking it to full trial, an issue that may work against you. Whether you need to question the validity of an arbitration agreement or whether you need help arbitrating a business litigation issue, you should speak to an attorney about your options.

What Is Arbitrability?

Arbitrability refers to whether an issue must be litigated in court or can be arbitrated instead. This issue comes up when an arbitration agreement requires that two parties arbitrate an issue and one of the parties does not want to be forced to arbitrate. This is often very important for commercial issues and corporate litigation issues.

When you sign a contract with an arbitration clause, you consent to arbitrate instead of going to trial. If you want to litigate an issue under the contract, you will likely have pushback from the other party regarding whether your dispute should go forward as a private arbitration and not as a lawsuit. The question turns into an issue of jurisdiction, as lawsuits are public actions and arbitrations are private ones. The issue of arbitrability will start with a motion by either party for an order directing both parties to comply with the arbitration clause.

Arbitrability is a difficult concept to understand and litigate, therefore it could be a costly venture to decide whether to arbitrate on top of the lawsuit costs that would follow if the person filing against arbitration is successful.

In Florida, determinations of arbitrability are cited to under the Florida Arbitration Code, which applies to issues that do not involve interstate commerce and do not otherwise require federal jurisdiction. If either of those two things is true, then the issue will be governed by the Federal Arbitration Act.

Where Does Florida Stand On Arbitration

The Florida Arbitration code has a three fold test for arbitrability:

  1. Was the written agreement to arbitrate valid?
  2. Is there an arbitrable issue?
  3. Was the right to arbitration waived?

It is no secret that Florida does prefer arbitration and the courts tend to believe that claims regarding arbitrability should be resolved in favor of the alternative dispute method. Florida uses what is called the rule of maximum breadth when construing language in arbitration agreements or contracts with them. This rule indicates that the court should give arbitration clauses the “broadest possible interpretation to accomplish the salutary purpose of resolving controversies out of court.” This rule, in application, seems to further enforce the concept of resolving arbitrability issues in favor of arbitration.

It is plausible that you may need to question whether your action must be subject to arbitration. In the event that your business needs legal advice and representation regarding the issue, it is important to reach out to an experienced business litigation attorney. If you need assistance with arbitration in West Palm beach, the attorneys at Pike & Lustig, LLP are prepared to help you immediately.

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