Arbitration & Mediation

Arbitration and "Choice of Law" Provisions, a Recipe for Enforcing

By Christopher B. Hopkins, Esq.

The Third DCA last week gave practitioners the key to enforcing arbitration in another state when the contract contains a choice of law provision. Somewhat to our surprise, some Florida lawyers wanted a malpractice claim to be heard by an arbitrator outside of Florida.

The underlying case is not terribly important in Default Proof Credit Card Systems, Inc. and Vincent Cuervo et al. v. David Kenneth Friedland; Leslie Jean Lott; Lott & Friedland, P.A.; Sanchelima & Associates, P.A.; Jesus Sanchelima; Raymond Niro; Niro Scavone, Haller & Niro et al. Suffice it to say a company seeking to enforce patents in South Florida hired a Chicago firm which ultimately hired local (Florida) counsel. The contract between the company and the Chicago firm included an arbitration clause and choice of law/venue clause (using Illinois law and Chicago as venue). Suit was brought in Florida federal court but was dismissed. A malpractice claim was brought by the company against lawyers and law firms -- all of whom moved for arbitration in Chicago using Illinois law.

The Third DCA (panel of Green, Suarez, and Cortinas) held that Florida courts are required to enforce choice of law provisions unless (1) it it unjust/unreasonable OR (2) the law of the foreign state contravenes strong Florida public policy. But that's just to get it into another state's court system -- not arbitration. To the contrary, under the Florida Administrative Code, Florida courts do not have the authority to require arbitration where the arbitrator will use the law of another state. In comes the Federal Arbitration Act (FAA), which compels all states to enforce arbitration (including arbitration in a foreign state using their laws) if the contract triggers interstate commerce.

The Court properly noted that interstate commerce was all over the place in this controversy: (1) patent case (federal issue), (2) interstate nature of alleged infringement, (3) representation by lawyers in multiple states, and (4) signatories were in different states.

Bottom line: as long as the choice of law and arbitration provisions are not completely coming out of left field, the moving party needs to invoke the FAA and trigger "interstate commerce," likely by showing there are parties and lawyers involved from multiple states.

Full post as published by Florida Arbitration Law on September 22, 2008 (boomark / email).