Massachusetts law recognizes arbitration as "a remedy created by statute which limits its availability to the parties to an arbitration agreement." Rae F. Gill, P.C. v. DiGiovanni, 34 Mass.App.Ct. 498, 503 (1993). In other words, a statute - the Massachusetts Arbitration Act (G.L. c. 251) ("MAA") - creates the ability for parties to settle their legal disputes through arbitration, but those parties also must have a prior agreement to do so. But what happens when one party refuses to arbitrate?
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.
The Seventh Circuit recently ruled that a party was bound to an arbitration award despite not being a signatory to the agreement to arbitrate. The court based its decision on the doctrine of "direct benefits estoppel," ruling that, even though the plaintiff was a non-signatory to the franchise agreement that contained an arbitration clause, she had received a direct benefit from the franchise agreement, and thus was bound under the terms of the arbitration award.
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.
Employers and employees everywhere should check their employee handbooks - if it has an arbitration provision, it is likely any disputes between the two will take place in arbitration rather than in court.
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.