Will an Ohio court send this dispute to the arbitrator, or decide it itself?
R.C. 2711.01(A), as the Supreme Court of Ohio quoted it, makes a provision in a written contract to settle by arbitration a controversy that subsequently arises out of the contract 'valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for the revocation of any contract.' Where the parties have a valid arbitration clause and one of them resists arbitration of a particular issue on the ground that the contract does not require it, a presumption in favour of arbitrability applies and the party resisting must overcome it (Council of Smaller Enterprises). Whether the parties agreed to arbitrate at all is for the court unless they clearly and unmistakably provide otherwise. The presumption, as the Court set out the governing federal principles, is that an order to arbitrate a particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute, with doubts resolved in favour of coverage; to overcome it the resisting party must show express exclusion or other forceful evidence that the dispute is not subject to the clause. The stay itself is granted under R.C. 2711.02(B), which the Court also quoted.
The trap
The four principles the Court applied are the United States Supreme Court's in AT&T Technologies, restated, not rules of Ohio's own making, and the presumption does not run in the same direction in every case. Council of Smaller Enterprises distinguishes First Options, where the party resisting had not personally signed the document containing the arbitration clause: there 'the presumption is against arbitrability because there is serious doubt that the party resisting arbitration has empowered the arbitrator to decide anything, including the arbitrator's own scope of authority.' And a challenge aimed at the contract as a whole does not keep the case in court: under ABM Farms as Taylor Building restates it, a party must demonstrate that the arbitration provision itself, and not merely the contract in general, was fraudulently induced, and a party challenging an arbitration provision as unconscionable must show that the arbitration clause itself is unconscionable, with unconscionability arguments aimed at the rest of the contract left to the arbitrator in the first instance.
9 authorities
- case117 Ohio St.3d 352Taylor Building Corp. of America v. BenfieldOhiodecided 2008read it at the source ↗
The words that state the rule
“A provision in any written contract * * * to settle by arbitration a controversy that subsequently arises out of the contract, or out of the refusal to perform the whole or any part of the contract, or any agreement in writing between two or more persons to submit to arbitration any controversy existing between them at the time of the agreement to submit, or arising after the agreement to submit, * * * shall be valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for the revocation of any contract.”
- case117 Ohio St.3d 352Taylor Building Corp. of America v. BenfieldOhiodecided 2008read it at the source ↗
The words that state the rule
Similarly, when a party challenges an arbitration provision as unconscionable pursuant to R.C. 2711.01(A), the party must show that the arbitration clause itself is unconscionable. If the court determines that the arbitration clause is enforceable, claims of unconscionability that relate to the contract generally, rather than the arbitration clause specifically, are properly left to the arbitrator in the first instance.
- case80 Ohio St.3d 661Council of Smaller Enterprises v. Gates, McDonald & Co.Ohiodecided 1998read it at the source ↗
The words that state the rule
The key factor in First Options that distinguishes it from this case is that in First Options, the parties resisting arbitration had not personally signed the document containing the arbitration clause. See 514 U.S. at 941 , 115 S.Ct. at 1922 , 131 L.Ed.2d at 991 . The Supreme Court contrasted the situation before it with a situation in which the parties to a valid arbitration clause have a contract providing for arbitration of some issues, and a party resists arbitration of an issue on the assertion that the contract does not require arbitration of that particular *667 issue. Id., 514 U.S. at 944-945 , 115 S.Ct. at 1924-1925 , 131 L.Ed.2d at 994 . The presumption in favor of arbitrability applies in the latter situation, which is also present in the case sub judice. In the First Options situation, on the other hand, the presumption is against arbitrability because there is serious doubt that the party resisting arbitration has empowered the arbitrator to decide anything, including the arbitrator’s own scope of authority.
- case80 Ohio St.3d 661Council of Smaller Enterprises v. Gates, McDonald & Co.Ohiodecided 1998read it at the source ↗
The words that state the rule
The second principle is that “the question of arbitrability — whether a[n] * * * agreement creates a duty for the parties to arbitrate the particular grievance — is undeniably an issue for judicial determination. Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.
- case117 Ohio St.3d 352Taylor Building Corp. of America v. BenfieldOhiodecided 2008read it at the source ↗
The words that state the rule
Thus, in ABM Farms , we held that to defeat a motion under R.C. 2711.02 for a stay of litigation in favor of arbitration, “a party must demonstrate that the arbitration provision itself in the contract at issue, and not merely the contract in general, was fraudulently induced.”
- case80 Ohio St.3d 661Council of Smaller Enterprises v. Gates, McDonald & Co.Ohiodecided 1998read it at the source ↗
The words that state the rule
For the reasons that follow, we find that a presumption in favor of the arbitrability of the parties’ dispute over the interpretation of Section 7.7(a)(i) of the agreement applies in the circumstances of this case, and that COSE, the party resisting arbitration, has failed to overcome the presumption.
- case80 Ohio St.3d 661Council of Smaller Enterprises v. Gates, McDonald & Co.Ohiodecided 1998read it at the source ↗
The words that state the rule
The fourth principle is that “where the contract contains an arbitration clause, there is a presumption of arbitrability in the sense that ‘[a]n order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.’ ”
- case80 Ohio St.3d 661Council of Smaller Enterprises v. Gates, McDonald & Co.Ohiodecided 1998read it at the source ↗
The words that state the rule
In applying the standard set forth in AT & T Technologies that the party resisting arbitration must meet in order to overcome the presumption in favor of arbitrability, we ask “whether, because of express exclusion or other forceful evidence, the dispute over the interpretation of [the ninety-day demand provision] *668 is not subject to the arbitration clause.”
- case117 Ohio St.3d 352Taylor Building Corp. of America v. BenfieldOhiodecided 2008read it at the source ↗
The words that state the rule
Ohio law directs trial courts to grant a stay of litigation in favor of arbitration pursuant to a written arbitration agreement on application of one of the parties, in accordance with R.C. 2711.02(B). That statute provides: {¶ 29} “If any action is brought upon any issue referable to arbitration under an agreement in writing for arbitration, the court in which the action is pending, upon being satisfied that the issue involved in the action is referable to arbitration under an agreement in writing for arbitration, shall on application of one of the parties stay the trial of the action until the arbitration of the issue has been had in accordance with the agreement, provided the applicant for the stay is not in default in proceeding with arbitration.”
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.