08 Apr Can State Law Prohibit Arbitration Agreements
Of particular interest was the discussion of the California Supreme Court at McGill on the fact that the waiver was included in an arbitration decision. The court rejected the accused`s assertion that the placement somehow immunizes a waiver that would otherwise not be applicable to the court. The McGill court cited the U.S. Supreme Court`s warning that “a party is not obliged to waive the material rights conferred by the law by agreeing to settle a legal right; it submits to its decision only in an arbitral tribunal and not in a judicial forum.  Then, the California Supreme Court, in a fine piece of Jujitsu Judge, took advantage of the accused`s overtaking to send him back to the California judicial system that he had tried to avoid. In response to the defendant`s protest that he had committed to avoid requests for service or notification in the arbitration process, the Supreme Court quashed the plaintiff`s request for omission and decided that it would be tried after liability and damages were processed. In addition, the new law states that it will not invalidate a written arbitration agreement that otherwise applies under the FAA. Jang and Kirmani found that most arbitration agreements are applicable under the FAA. Some states, including Florida, Virginia, North Carolina, South Carolina and Louisiana, have passed laws that prohibit the application of forum selection clauses. Despite these state statutes, which prohibit the application of forum selection clauses in relation to public policy, the parties may nevertheless apply forum selection clauses when arbitration is the contractual method of dispute resolution.
Some courts have held that the Federal Arbitration Act (“FAA”) anticipates government laws that prohibit forum selection clauses in relation to public policy. As a general proposition, Cote J. found that the FAA anticipates any state law that discriminates on its face against the FAA. The New York law expressly provided that any provision of mandatory arbitration in an employment contract providing that arbitration is the only and last resort for such a claim is “null and void.” Latif went to the Second Circuit Court of Appeals, where a request for a hearing was filed.