February 06, 2014 Articles

When the Arbitration Forum Is Unavailable: What Happens Next?

By Christopher J. Karacic and Howard S. Suskin

Selecting an appropriate forum is central to drafting a contract that provides for arbitration in the event of a dispute. But sometimes circumstances change and an agreed-upon arbitration forum becomes unavailable. The courts disagree on how to proceed in this situation. Indeed, a circuit split has emerged over whether a court should appoint substitute arbitrators and enforce arbitration, or simply excuse parties from their obligations to arbitrate when an agreed-upon arbitration forum is no longer available.

Courts' approaches as to whether to enforce arbitration when a specified arbitration forum is unavailable have been influenced by two overarching principles. First, arbitration is a creature of contract and "courts must rigorously enforce arbitration agreements according to their terms, including terms that specify with whom [the parties] choose to arbitrate their disputes and the rules under which that arbitration will be conducted . . . ." Am. Express. Co. v. Italian Colors Rest., 133 S. Ct. 2304, 2309 (2013). Second, Congress has created a national policy favoring arbitration through the enactment of the Federal Arbitration Act (FAA). Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581 (2008). The FAA places arbitration agreements on equal footing with all other contracts. See Hall St. Assocs., 552 U.S. at 581.

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