Is this arbitration clause enforceable in North Dakota, and who decides whether the underlying agreement exists?
A written arbitration agreement is presumptively valid and the court, not the arbitrator, decides the threshold question of whether one exists. N.D.C.C. § 32-29.3-06(1): "An agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract." Section 32-29.3-06(2) assigns that threshold question to the court: "The court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate." Once shown, N.D.C.C. § 32-29.3-07(1)(b) makes enforcement close to automatic if a party opposes: "[T]he court shall proceed summarily to decide the issue and order the parties to arbitrate unless it finds that there is no enforceable agreement to arbitrate." Note what subsection 3 gives the ARBITRATOR instead: "An arbitrator shall decide whether a condition precedent to arbitrability has been fulfilled and whether a contract containing a valid agreement to arbitrate is enforceable." Schwarz v. Gierke names the chapter ("Chapter 32-29.3, N.D.C.C., contains the North Dakota Uniform Arbitration Act."), applies subsection 2 to decide the threshold question itself, and reversed an order refusing to compel arbitration, "[r]esolving any doubts concerning the scope of arbitrable issues in favor of arbitration."
The trap
Chapter 32-29.3 is not the only North Dakota arbitration statute: Chapter 32-29.4 is a separate act for family-law disputes (its definitions open: "'Arbitration agreement' means an agreement that subjects a family law dispute to arbitration"), so a commercial contract's clause is governed by Chapter 32-29.3 and a family-law arbitration is not. Section 32-29.3-04 also makes a list of the chapter's own protections NON-waivable before a controversy arises, including the validity rule of § 32-29.3-06(1) itself, the right to provisional remedies under § 32-29.3-08, and a party's right to be represented by a lawyer under § 32-29.3-16 (subject to a narrower carve-out letting an employer and a labor organization waive lawyer-representation in a labor arbitration): an arbitration clause that purports to waive any of these in advance is ineffective as to that term even if the rest of the clause is enforced, and the longer list in § 32-29.3-04(3), which includes § 32-29.3-07 itself, cannot be waived or varied at any time, before or after a controversy arises. Three further points are easy to miss. The court may not screen the claim on the way in: "The court may not refuse to order arbitration because the claim subject to arbitration lacks merit or grounds for the claim have not been established." Challenging the agreement's existence does not by itself stop the arbitration, because "the arbitration proceeding may continue pending final resolution of the issue by the court, unless the court otherwise orders." And North Dakota's pro-arbitration tilt is narrower than the slogan: the Court resolves doubts about scope in favour of arbitration "when there is a broad arbitration clause and no exclusion clause."
11 authorities
- statuteN.D.C.C. § 32-29.3-06enactment date not established
The words that state the rule
An agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract.
- statuteN.D.C.C. § 32-29.3-06enactment date not established
The words that state the rule
The court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate. - An arbitrator shall decide whether a condition precedent to arbitrability has been fulfilled and whether a contract containing a valid agreement to arbitrate is enforceable. - If a party to a judicial proceeding challenges the existence of, or claims that a controversy is not subject to, an agreement to arbitrate, the arbitration proceeding may continue pending final resolution of the issue by the court, unless the court otherwise orders.
- statuteN.D.C.C. § 32-29.3-07enactment date not established
The words that state the rule
On motion to a person showing an agreement to arbitrate and alleging another person's refusal to arbitrate pursuant to the agreement: - If the refusing party does not appear or does not oppose the motion, the court shall order the parties to arbitrate; and - If the refusing party opposes the motion, the court shall proceed summarily to decide the issue and order the parties to arbitrate unless it finds that there is no enforceable agreement to arbitrate.
The words that state the rule
Chapter 32-29.3, N.D.C.C., contains the North Dakota Uniform Arbitration Act. When an arbitration clause is at issue, “[t]he court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate.” N.D.C.C. § 32-29.3-06(2).
The words that state the rule
Resolving any doubts concerning the scope of arbitrable issues in favor of arbitration, we conclude the arbitration provision at issue is a broad provision which applies to Schwarzes’ claims based primarily on the relationship between Gierke and Jodee Schwarz and asserts a breach of an alleged duty Gierke owed to Jodee Schwarz. We therefore conclude the district court erred in denying Gierke’s motion to compel arbitration. IV [¶ 30] The district court order denying the motion to compel arbitration is reversed, and the case is remanded for entry of an order compelling arbitration.
- statuteN.D.C.C. § 32-29.4-01enactment date not established
The words that state the rule
"Arbitration agreement" means an agreement that subjects a family law dispute to arbitration.
- statuteN.D.C.C. § 32-29.3-04enactment date not established
The words that state the rule
Except as otherwise provided in subsections 2 and 3, a party to an agreement to arbitrate or to an arbitration proceeding may waive or, the parties may vary the effect of, the requirements of this chapter to the extent permitted by law. - Before a controversy arises that is subject to an agreement to arbitrate, a party to the agreement may not: - Waive or agree to vary the effect of the requirements of subsection 1 of section 32-29.3-05, subsection 1 of section 32-29.3-06, section 32-29.3-08, subsections 1 and 2 of section 32-29.3-17, or section 32-29.3-26 or 32-29.3-28;
- statuteN.D.C.C. § 32-29.3-04enactment date not established
The words that state the rule
Waive the right under section 32-29.3-16 of a party to an agreement to arbitrate to be represented by a lawyer at any proceeding or hearing under this chapter, but an employer and a labor organization may waive the right to representation by a lawyer in a labor arbitration.
- statuteN.D.C.C. § 32-29.3-07enactment date not established
The words that state the rule
The court may not refuse to order arbitration because the claim subject to arbitration lacks merit or grounds for the claim have not been established.
- statuteN.D.C.C. § 32-29.3-04enactment date not established
The words that state the rule
A party to an agreement to arbitrate or arbitration proceeding may not waive, or the parties may not vary the effect of, the requirements of this section or subsection 1 or 3 of section 32-29.3-03, section 32-29.3-07, 32-29.3-14, or 32-29.3-18, subsection 4 or 5 of section 32-29.3-20, section 32-29.3-22, 32-29.3-23, or 32-29.3-24, subsection 1 or 2 of section 32-29.3-25, or section 32-29.3-29 or 32-29.3-30.
The words that state the rule
Further, recognizing a strong state and federal public policy favoring the arbitration process, this Court resolves any doubts concerning the scope of arbitrable issues in favor of arbitration when there is a broad arbitration clause and no exclusion clause.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.