Arbitration agreements often name a particular arbitral forum to conduct an arbitration, but what if, when a dispute arises, that arbitral forum no longer exists or is otherwise unavailable? In Inetianbor v. CashCall, Inc., 768 F.3d 1346, 1350 (11th Cir. 2014), the Eleventh Circuit held that "the failure of the chosen forum precludes arbitration whenever the choice of forum is an integral part of the agreement to arbitrate, rather than an ancillary logistical concern." This ruling reinforced Eleventh Circuit precedent and reflects the law in the majority of Circuit Courts that have considered the question.
In yet another decision that underscores the "elemental tenet" of arbitration that a party cannot be compelled to arbitrate if he or she has not agreed to arbitrate, the Massachusetts Appeals Court recently ruled that a non-signatory to an agreement cannot be compelled by a signatory to arbitrate a dispute that the non-signatory did not agree to arbitrate.
Like other states, Massachusetts has enacted an arbitration statute that provides a streamlined procedure for compelling a party to arbitrate. Section 1 of the Massachusetts Uniform Arbitration Act, G.L. c. 251, recognizes two types of arbitration agreements: (i) those requiring parties to a contract to submit any dispute arising between them to arbitration, and (ii) those requiring parties to submit an existing dispute to arbitration. If a party reneges on either type of agreement, the aggrieved party can file an application in the Massachusetts Superior Courts to compel arbitration. Such applications are heard as motions and typically must be served on the non-arbitrating party in the manner required for original writs of summons, though the parties can agree, and often do agree, on another procedure for service.
Mandatory arbitration clauses present in contracts are binding on assignees of those contracts, even where the transfer agreements assigning those contracts do not themselves contain arbitration clauses, the United States Court of Appeals for the First Circuit has ruled.
Social media users are fuming over changes in the popular photo-sharing and social networking website Instagram's Terms of Service. The most talked-about change appears to give Instagram the right to sell users' photographs to third parties for use in advertisements: "...You agree that a business or other entity may pay us to display your username, likeness, photos..., and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you." The backlash against that clause has been severe, but it isn't the only change Instagram made to its TOS. Beginning January 16, 2013, Instagram users will be obligated to arbitrate most disputes they have with the company and to waive rights to participate in a class action lawsuit or class-wide arbitration against Instagram, unless they opt-out of the arbitration clause in writing.
The dispute resolution clause in commercial contracts is very often inserted at the last minute without much attention given to the implications of the particular language contained in the clause. It is increasingly common to see "stepped" dispute resolution clauses, whereby the parties agree to mediate disputes arising under the contract and, if mediation fails to resolve the dispute, to arbitrate. The popularity of stepped clauses is due in part to the fact that they make a quick, inexpensive resolution possible through mediation, but provide arbitration as a fallback mechanism for dispute resolution. While wholly reasonable on their face, stepped dispute resolution clauses can have surprising consequences when a business relationship sours.