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What Makes An Arbitration Agreement Invalid

In 1998, the Federal Court of Appeals, which governs the State of California, issued its decision to Duffield v. Roberts- Stevenson Company (9. 1998) 144 F.3d 1182. The Duffield court ruled that the Civil Rights Act of 1991 prohibited the application of mandatory employment contracts to settle claims under Title VII of the Civil Rights Act of 1964 or state anti-discrimination laws equivalent to those of the California Fair Employment and Housing Act (“FEHA”). In Duffield, the case was a stockbroker who was attempting to charge government and federal discrimination claims against their employer as a result of allegations of sexual discrimination and harassment. The Civil Rights Act of 1991 states that “where appropriate and to the extent permitted by law, the use of other means of dispute resolution, including . . . . Arbitration is encouraged to resolve disputes arising from federal statutes or provisions that are amended by that title.¬†Despite this language, the court found the status congress`s intention to prohibit mandatory civil rights arbitration of employees. The 9th Circle was the only federal appels court to adopt such a strong attitude against the resolution of labour disputes. As a result, most legal experts concluded that arbitration agreements governing discrimination and related rights were null and void. Article 7 of the judicial interpretation of arbitral law provides that a compromise clause (2) is invalid if the parties to the agreement agree that disputes can be resolved either by arbitration before an arbitration board or by litigation before a people`s court, unless one party files an appeal to form an arbitration tribunal and the other party does not object within the time limit set out in Article 20 , paragraph 2, of the right to arbitration.

2. A compromise clause may be included in a contract concluded by the parties or in some other form of written agreement providing for the resolution of disputes by arbitration by the parties. “The term “inoperable” may be considered applicable in cases where the arbitration agreement is no longer valid. Stopping the effect on the arbitration agreement can occur for a number of reasons. One reason could be that the parties implicitly or explicitly revoked the conciliation agreement. Another may be that the same dispute between the same parties has already been resolved in the context of arbitration or legal proceedings (legal principles…). In this case, the arbitration clause expressly provided that companies could submit any dispute either to an arbitration board or to a popular court. Instead of objecting to the validity of the compromise clause, Company A was fully involved in the arbitration. As such, Company A and Company B have effectively agreed to adopt an arbitration procedure as an appropriate dispute resolution mechanism. Therefore, the price was final and mandatory.

The Florida court, which heard the case, rejected the company`s request to force arbitration and found that the court was the right place to criticize the allegation that the contract was illegal and inconclusive.