Although arbitration clauses are common in many types of contracts and particularly in construction contracts, the contracting parties sometimes differ on their enforceability or their application to particular disputes. “[W]hether the parties are bound by a given arbitration clause raises a question of arbitrability,” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002). But is arbitrability itself a question for the court or for the arbitrator to decide?
The general rule is that questions of arbitrability are decided by the courts “unless the parties clearly and unmistakably provide otherwise.” Appeal of Town of Durham, 149 N.H. 486, 488 (2003), quoting AT&T Technologies v. Communications Workers, 475 U.S. 643, 649 (1986). What constitutes “clear and unmistakable” evidence that the power to determine arbitrability has been delegated to the arbitrator is often itself a contentious issue. For example, an arbitration clause that incorporates the American Arbitration Association’s rules, which empower the arbitrator to decide issues of arbitrability, is usually deemed to be “clear and unmistakable evidence of the parties’ intent to delegate such issues to an arbitrator.” Contec Corp. v. Remote Sol. Co., Ltd., 398 F.3d 205, 208 (2d Cir. 2005). But in New Hampshire at least, if the parties’ contract allows one or both of them to elect either litigation or AAA arbitration for resolving contractual disputes, and one of the parties then insists on arbitration in accordance with AAA rules, that clarity and unmistakability are lost and the court will decide the arbitrability issue. Hoyle, Tanner & Associates, Inc. v. 150 Realty, LLC, 172 N.H. 455 (2019).
A clear and unmistakable delegation clause is enforceable even where a party sues on a claim that is obviously not within the scope of what was agreed to be arbitrable; the opposing party can still invoke the delegation clause to insist that the arbitrator, not the court, decide its arbitrability. Henry Schein, Inc. v. Archer and White Sales, Inc., 139 S.Ct. 524, 529 (2019), which likewise involved a contract incorporating the AAA rules, makes the point: “When the parties’ contract delegates the arbitrability question to an arbitrator, a court may not override the contract. In those circumstances, a court possesses no power to decide the arbitrability issue. That is true even if the court thinks that the argument that the arbitration agreement applies to a particular dispute is wholly groundless.” The Court brushed aside the argument that its ruling would invite “frivolous motions to compel arbitration,” noting that arbitrators “can efficiently dispose of frivolous cases by quickly ruling that a claim is not in fact arbitrable,” id. at 531.
Henry Schein has left courts with little wiggle room to deny a motion to dismiss founded on a valid delegation clause, but our own federal court has been among the first to start wiggling. In Bossé v. New York Life Insurance Company, No. 19-cv-016-SM, 2019 WL 5967204 (Nov. 13, 2019), the defendant moved to dismiss a discrimination claim, relying on a delegation clause in a 2004 employment contract that had been terminated and did not form the basis of the plaintiff’s claim, but which recited that it would survive termination and govern “any dispute, claim or controversy arising between” the parties. Judge McAuliffe denied the motion, ruling that he should decide arbitrability and deciding that the claim was not arbitrable. Acknowledging that “there are no words used that explicitly limit the clause’s application to only those disputes bearing some relationship to or having some connection to the contract in which it is found,” he nevertheless held that at least a minimal relationship was required, finding that “[n]o reasonable person in either Bossé’s position or New York Life’s position would have understood the 2004 Partner’s Agreement arbitration provision (and survival provision) to require arbitration of any and all future claims of whatever nature or type, no matter how unrelated to the Partner’s Agreement, and no matter how distant in the future the claim arose.”
The case is now on appeal – itself a testament to how important this preliminary issue of who gets to decide the proper forum for adjudication often is to the contestants. [Case update: the First Circuit Court of Appeals has reversed the decision, 992 F.3d 20 (1st Cir. 2021).]
The general rule is that questions of arbitrability are decided by the courts “unless the parties clearly and unmistakably provide otherwise.” Appeal of Town of Durham, 149 N.H. 486, 488 (2003), quoting AT&T Technologies v. Communications Workers, 475 U.S. 643, 649 (1986). What constitutes “clear and unmistakable” evidence that the power to determine arbitrability has been delegated to the arbitrator is often itself a contentious issue. For example, an arbitration clause that incorporates the American Arbitration Association’s rules, which empower the arbitrator to decide issues of arbitrability, is usually deemed to be “clear and unmistakable evidence of the parties’ intent to delegate such issues to an arbitrator.” Contec Corp. v. Remote Sol. Co., Ltd., 398 F.3d 205, 208 (2d Cir. 2005). But in New Hampshire at least, if the parties’ contract allows one or both of them to elect either litigation or AAA arbitration for resolving contractual disputes, and one of the parties then insists on arbitration in accordance with AAA rules, that clarity and unmistakability are lost and the court will decide the arbitrability issue. Hoyle, Tanner & Associates, Inc. v. 150 Realty, LLC, 172 N.H. 455 (2019).
A clear and unmistakable delegation clause is enforceable even where a party sues on a claim that is obviously not within the scope of what was agreed to be arbitrable; the opposing party can still invoke the delegation clause to insist that the arbitrator, not the court, decide its arbitrability. Henry Schein, Inc. v. Archer and White Sales, Inc., 139 S.Ct. 524, 529 (2019), which likewise involved a contract incorporating the AAA rules, makes the point: “When the parties’ contract delegates the arbitrability question to an arbitrator, a court may not override the contract. In those circumstances, a court possesses no power to decide the arbitrability issue. That is true even if the court thinks that the argument that the arbitration agreement applies to a particular dispute is wholly groundless.” The Court brushed aside the argument that its ruling would invite “frivolous motions to compel arbitration,” noting that arbitrators “can efficiently dispose of frivolous cases by quickly ruling that a claim is not in fact arbitrable,” id. at 531.
Henry Schein has left courts with little wiggle room to deny a motion to dismiss founded on a valid delegation clause, but our own federal court has been among the first to start wiggling. In Bossé v. New York Life Insurance Company, No. 19-cv-016-SM, 2019 WL 5967204 (Nov. 13, 2019), the defendant moved to dismiss a discrimination claim, relying on a delegation clause in a 2004 employment contract that had been terminated and did not form the basis of the plaintiff’s claim, but which recited that it would survive termination and govern “any dispute, claim or controversy arising between” the parties. Judge McAuliffe denied the motion, ruling that he should decide arbitrability and deciding that the claim was not arbitrable. Acknowledging that “there are no words used that explicitly limit the clause’s application to only those disputes bearing some relationship to or having some connection to the contract in which it is found,” he nevertheless held that at least a minimal relationship was required, finding that “[n]o reasonable person in either Bossé’s position or New York Life’s position would have understood the 2004 Partner’s Agreement arbitration provision (and survival provision) to require arbitration of any and all future claims of whatever nature or type, no matter how unrelated to the Partner’s Agreement, and no matter how distant in the future the claim arose.”
The case is now on appeal – itself a testament to how important this preliminary issue of who gets to decide the proper forum for adjudication often is to the contestants. [Case update: the First Circuit Court of Appeals has reversed the decision, 992 F.3d 20 (1st Cir. 2021).]
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