It’s no secret that The Wrath of Khan is, without question, the best of the Star Trek movies. It’s also no secret that, generally speaking, courts will bend over backwards to enforce arbitration provisions, and we’ve previously covered what can happen when the arbitrator/arbitration forum you specify in your contract either no longer exists or can’t arbitrate your case–such as the National Arbitration Forum. (See our prior posts on various arbitration topics here, here, and here.) So, how are the two connected?
Well, the Third Circuit, had not chimed in on such issues until it decided Khan v. Dell a couple of weeks ago (see what we did there?). This case, too, involved the inability of the NAF to hear a case due to its consent judgment with the State of Minnesota. Other courts, including the district court in this case (as well as our own Indiana Court of Appeals), have held that the naming of the NAF was “integral” to the arbitration agreement, and since the NAF couldn’t hear the case, that meant there was no enforceable arbitration agreement. But the Third Circuit, citing the “liberal federal policy in favor of arbitration,” held that the unavailability of the NAF was really just a “lapse” in the arbitration process, and so section 5 of the FAA permitted the court to name a replacement.
So, what’s the takeaway? Well, generally speaking, most courts will enforce arbitration agreements as they are written–unless, of course, what’s written is impossible to enforce, in which case some courts will toss out the arbitration provision, whereas others will force the parties to arbitrate before an arbitrator or arbitration forum they didn’t agree to.
Also, if this Khan is anything like Ricardo Montalban, expect his revenge to be awesomely overacted.