Will a Wisconsin court enforce this arbitration clause?
Wis. Stat. § 788.01 makes a provision in any written contract to settle by arbitration a controversy thereafter arising out of the contract valid, irrevocable and enforceable except upon such grounds as exist at law or in equity for the revocation of any contract. The same section then excludes a class of agreements from the chapter: it does not apply to contracts between employers and employees, or between employers and associations of employees, except as provided in s. 111.10, nor to agreements to arbitrate disputes under s. 292.63 (6s) or 230.44 (4) (bm).
The trap
The statute's "grounds as exist at law or in equity for the revocation of any contract" is where Wisconsin arbitration clauses actually die, and the Supreme Court of Wisconsin has used it: in Wisconsin Auto Title Loans the court held an arbitration provision unconscionable and unenforceable, and decided the challenge itself even though the clause said validity was for the arbitrator, recording in the same breath that the lender had not argued that validity must be decided in arbitration. The route is not an easy one: the party attacking the provision carries the burden of proving the facts that justify the legal conclusion that it is invalid. Note also what § 788.01 does and does not do. The employment exclusion is a statement about the scope of ch. 788, not about whether an employment arbitration agreement is enforceable under other law, and nothing verified here decides what the Federal Arbitration Act does to that exclusion. What the authority here does decide runs the other way and is worth knowing: the Federal Arbitration Act does not preempt Wisconsin's unconscionability analysis, because that analysis does not single out arbitration provisions.
8 authorities
- statuteWis. Stat. § 788.01enactment date not established
The words that state the rule
A provision in any written contract to settle by arbitration a controversy thereafter arising out of the contract, or out of the refusal to perform the whole or any part of the contract, or an agreement in writing between 2 or more persons to submit to arbitration any controversy existing between them at the time of the agreement to submit, shall be valid, irrevocable and enforceable except upon such grounds as exist at law or in equity for the revocation of any contract.
- statuteWis. Stat. § 788.01enactment date not established
The words that state the rule
This chapter shall not apply to contracts between employers and employees, or between employers and associations of employees, except as provided in s. 111.10 , nor to agreements to arbitrate disputes under s. 292.63 (6s) or 230.44 (4) (bm) .
The words that state the rule
The challenge to the validity of the arbitration provision is to be decided by the courts, even though the arbitration provision in the instant contract provides that the validity of the arbitration provision is to be decided in arbitration. Indeed, Wisconsin Auto Title Loans does not argue that the validity of the arbitration provision must be decided in arbitration.
The words that state the rule
We hold that the arbitration provision of the loan agreement between Wisconsin Auto Title Loans and the borrower is unconscionable.
The words that state the rule
Second, arbitration provisions are presumed to be valid in Wisconsin. 13 An arbitration provision, *531 however, may be invalid for reasons that apply to all contract provisions.
The words that state the rule
The dispositive issue in this case is whether the arbitration provision in the loan agreement between Wisconsin Auto Title Loans and the borrower is unconscionable and, therefore, unenforceable.
The words that state the rule
Fourth, a party seeking to invalidate a provision in a contract (here the borrower) has the burden of proving facts that justify a court's reaching the legal conclusion that the provision is invalid.
The words that state the rule
Our application of state contract law to invalidate the arbitration provision at issue in the instant case is consistent with § 2 of the Federal Arbitration Act. Indeed, the United States Supreme Court has expressly stated that " [generally applicable con *557 tract defenses, such as fraud, duress, or unconsciona-bility, may be applied to invalidate arbitration agreements without contravening § 2 ... ." 65 Our contract law on unconscionability does not single out arbitration provisions. 66 We therefore conclude that the Federal Arbitration Act does not preempt our unconscionability analysis.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.