Arbitration Law's Separability Doctrine
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Transcript of Arbitration Law's Separability Doctrine
Arbitration Law’s Separability Doctrine
I. Prima Paint
II. Buckeye
III. Applications of Separability
IV. Open Issues
Prima Paint
Allegation: container contract induced by fraud
Holding: court may not address that argument
Result: Prima Paint has a duty to arbitrate
Prima Paint
“arbitration clauses as a matter of federal law are ‘separable’ from the contracts in which they are embedded”
Prima Paint
Open issues:
- applies to what arguments beyond fraudulent inducement?
- preempts inconsistent state law?
Buckeye
Answers 1.5 of the 2 open issues from Prima:
- separability doctrine does preempt inconsistent state law
- separability doctrine applies not just to misrepresentation but also to some (all?) other arguments that an arbitration agreement is unenforceable
Buckeye
Allegation: container contract illegal
Holding: court may not address that argument
Applications of Separability
mutual assent, consideration, authority to assent on behalf of others, mistake, duress, undue influence, incapacity, unconscionability, impracticability, frustration of purpose, statute of frauds, statute of limitations
Which of these arguments go to the arbitrator?
Buckeye
“The issue of the contract’s validity is different from the issue of whether any agreement between the alleged obligor and obligee was ever concluded. Our opinion today addresses only the former,”
Buckeye
“Our opinion today ... does not speak to the issue decided in the cases ... [holding] that it is for courts to decide whether the alleged obligor ever signed the contract, whether the signor lacked authority to commit the alleged principal, and whether the signor lacked the mental capacity to assent” (citations omitted)
Buckeye
“The issue of the contract’s validity is different from the issue of whether any agreement between the alleged obligor and obligee was ever concluded.” Is this the distinction between formation of a contract and a defense to its enforcement?
For Court?
Formation:
- mutual assent, - consideration, - authority to assent on behalf of others,
For Arbitrator?
Defenses to enforcement:
mistake, duress, undue influence, incapacity, unconscionability, impracticability, frustration of purpose, statute of frauds, statute of limitations
Normative Views
What do we think of a separability doctrine that has courts deciding arguments that no contract (alleged obligor and obligee) was formed but sends to arbitrators arguments raising a defense to the enforcement of the contract?
Normative Views on Formation/Defense Distinction
Park RauWare
Normative Views on Formation/Defense Distinction
Park: pretty good? RauWare
Normative Views on Formation/Defense Distinction
Park: pretty good? Rau: pretty good except duress and incapacityWare
Normative Views on Formation/Defense Distinction
Park: pretty good? Rau: pretty good except duress and incapacityWare: pretty bad
Separability: Friend or Foe of Contractual Freedom?
Foe.
Ware’s position: no duty to arbitrate unless that party has formed an enforceable contract to arbitrate.