Tuesday, February 06, 2007, 3:31 PM

Minimalist Arbitration Clause Passes Muster, J. McGee Would Hold Appellant's Appeal Does Not

In Goldstein v. American Steel Span, Inc., filed today, the NC COA, in a split decision, held that a minimalist arbitration provision was enforceable and that a chosen venue for such arbitration is enforceable under the Federal Arbitration Act, regardless of (preempted) NC policy.

In Goldstein, the plaintiff contracted to buy unassembled buildings from defendant. Included in the contract was a minimalist arbitration provision stating: "All claims, disputes, and other matters in question arising out of or relating to this Agreement of Sale, or breach hereof, shall be submitted to binding arbitration in the City of Fargo, North Dakota." The trial court found the clause too indefinite to be enforceable and the chosen venue of ND to be unreasonable and against NC policy. The COA disagreed.

While the COA noted that parties to an arbitration must specify the scope and terms of their agreement to arbitrate, the Uniform Arbitration Act governs and provides a number of "gap-fillers," including about selecting an arbitrator, that save an otherwise fatally vague arbitration agreement like the one in this case.

The COA also disagreed with the trial court's ruling that designating North Dakota as the locale for the arbitration was unreasonable and in contravention of NC policy. The COA held that the FAA applied, and that the FAA preempts NC law and policy. The parties agreed upon a locale for arbitration in their contract; that locale would be enforced.

Judge McGee dissented from the majority (comprised of Judges Elmore and Bryant) on the basis of appellate rules violations. Judge McGee held that the appellant had not preserved its FAA and preemption arguments in its assignments of error. Judge McGee therefore believed the majority was creating an appeal for the appellant and cited to Viar (where bases of the majority opinion were not simply not preserved by assignments but were not argued in the appellant's brief--which was not the case here). Judge McGee also noted that the appellant had failed to include a statement of the grounds for appellate review and applicable standard of review.

Take-away from Goldstein: Minimalist arbitration clauses may be enforced, and appellate counsel, heed those rules.


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