More Texas Bloggers Discuss Arbitrability

Barry Barnett’s Blawgletter discussed a recent Second Circuit arbitrability opinion yesterday (Ross v. American Express). The opinion holds that Section 16 of the FAA, which allows interlocutory appeal of an order refusing to compel arbitration, applies in cases where the motion to compel arbitration was based not on a written agreement to arbitrate, but upon estoppel principles by which courts sometime compel non-signatories to arbitrate (we have discussed this phenomena in Texas at length in the past). Section 16 of the FAA in turn refers to Section 3, which requires courts to send cases to arbitration when they involve issues “referable to arbitration under an agreement in writing for such an arbitration” (emphasis added).

In the Ross case, the party that had defeated a Section 3 motion to compel arbitration argued that no interlocutory appeal of that decision was possible, since no written agreement to arbitrate existed. According to the Second Circuit, however, the estoppel theories for requiring non-signatories to arbitrate actually create agreements in writing to arbitrate, thus satisfying the FAA’s written agreement requirement. In other words, if estoppel creates an agreement to arbitrate where none obviously exists, then it also creates an agreement in writing to arbitrate where none obviously exists. To hold otherwise, argues the Court, would completely derail the established movement favoring arbitration-by-estoppel.

Thanks again to Barry for the heads-up on an interesting case. A link to the opinion is available on his site, for those interested

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