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FLORIDA BUSINESS LITIGATION: FLORIDA AND FEDERAL COURTS BROADLY INTERPRET AMBIGUOUS ARBITRATION CONTRACTS IN FAVOR OF REQUIRING ARBITRATION

Businesses often prefer to resolve their disputes by arbitration rather than litigation.  When two parties who have entered into an agreement to arbitrate their disputes, that agreement to arbitrate is usually enforceable by either party.  Frequently, one party may renege on its agreement to arbitrate for strategic reasons and attempt to avoid arbitrating the dispute in Court.  The Federal Arbitration Act (“FAA”) and its Florida counterpart, the Florida Revised Uniform Arbitration Act (“FRUAA”), have been interpreted to give preferred treatment to agreements to arbitrate.  As a result, it is particularly difficult for litigants to avoid arbitration.  Peter Mavrick is a Fort Lauderdale business litigation attorney who has extensive experience in representing the interests of businesses and business owners in arbitration.

“An agreement to arbitrate is an agreement to proceed under arbitration and not under court rules.” Suarez–Valdez v. Shearson/American Express, Inc., 845 F.2d 950 (11th Cir. 1988).  Florida businesses have strong incentives to enforce agreements to arbitrate.  Arbitration can be swifter and less costly than traditional litigation.  Parties in arbitration generally have less power to seek potentially costly and invasive discovery on the other party. “[A] party’s ability to take depositions and to propound discovery requests is generally much more limited in arbitration than it is under the Florida or the federal civil rules.”  Green Tree Servicing, LLC v. McLeod, 15 So. 3d 682 (Fla. 2d DCA 2009).

Whether a particular dispute should be arbitrated depends on what the parties agreed to arbitrate.  “The intent of the parties to a contract, as manifested in the plain language of the arbitration provision and contract itself, determines whether a dispute is subject to arbitration.  Courts generally favor such provisions, and will try to resolve an ambiguity in an arbitration provision in favor of arbitration.”  Jackson v. Shakespeare Found., Inc., 108 So. 3d 587 (Fla. 2013).

Clauses in agreements to arbitrate are considered differently than other types of clauses.  While ambiguous or uncertain contracts can sometimes be interpreted against the drafter of the contract, the same is not so for arbitration clauses.  “The Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.”  Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983); see Auchter Co. v. Zagloul, 949 So. 2d 1189, 1195 (Fla. 1st DCA 2007) (“[A]rbitration clauses are to be given the broadest possible interpretation in order to accomplish the purpose of resolving controversies out of court…[and] any doubts concerning their scope should generally be resolved in favor of arbitration”). “[I]ssues of procedural arbitrability, including conditions precedent to arbitration, are for arbitrators to decide.” Dimattina Holdings, LLC v. Steri-Clean, Inc., 195 F. Supp. 3d 1285, 1289 (S.D. Fla. 2016).

The seminal case of Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006), describes how almost all challenges to an arbitration agreement are questions to be addressed by an arbitrator and not for a court.  “[A]s a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract [, and] unless the challenge is to the arbitration clause itself, the issue of the contract’s validity is considered by the arbitrator in the first instance.”  Id.  The Court in Buckeye found that even if a contract was void or illegal, the arbitration clause would still be enforced. The court explained “a challenge to the validity of the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator.” Id.

Essentially, the only ways that a party may avoid arbitration of their dispute is to show that it had never agreed to the contract containing the arbitration clause or show that the dispute is outside the bounds of what the parties had agreed to arbitrate.

Peter Mavrick is a Fort Lauderdale business litigation lawyer who regularly represents businesses in their disputes in both court and arbitration.  This article does not serve as a substitute for legal advice tailored to a particular situation.

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