Courts have attempted to establish clear rules governing when and whether the Court or the arbitrator is to determine issues of arbitrability. Under the Federal and state arbitration statutes, it is the Court that makes the determination as to whether the parties have made an agreement to arbitrate. However, with regard to the scope of the matters and issues that are subject to the arbitration agreement, the U.S. Supreme Court in A T & T Techs., Inc. v. Communications Workers of America. 475 U.S. 643, 649 (1986) ruled that:
“Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.”
Since the A T & T case, Courts have applied the “clear and unmistakable” standard and have consistently ruled that such issues of arbitrability may be delegated to the arbitrator by agreement or by incorporation or adoption of specific rules of arbitration.
JAMS Rules. Recently, the 4th Circuit Court in Simply Wireless, Inc. v. T-Mobile US, Inc., __ F.3d __, 2017 WL 6374105 (4th Cir. Dec. 13, 2017) addressed a situation where the parties adopted the JAMS rules of arbitration. the JAMS rules provided:
Rule 11(b) of the JAMS Comprehensive Arbitration Rules & Procedures (effective July 1, 2014) provides that jurisdictional and arbitrability disputes, including disputes over the formation, existence, validity, interpretation or scope of the agreement under which Arbitration is sought . . . shall be submitted to and ruled on by the Arbitrator. The Arbitrator has the authority to determine jurisdiction and arbitrability issues as a preliminary matter.
The 4th Circuit ruled that this was a clear and unmistakable agreement to have the issue of arbitrability determined by the arbitrator.
AAA Rules. In Brennan v. Opus Bank, 796 F.3d 1125 (9th Cir. 2015), the 9th Circuit Court ruled that an employment arbitration agreement provision that incorporated the Arbitration Rules of the American Arbitration Association which provided that the arbitrator is to decide issues of arbitrability is enforceable. The employment agreement had a broad arbitration provision which stated:
“Except with respect to any claim for equitable relief . . . any controversy or claim arising out of this Agreement or [Plaintiff’s] employment with the Bank or the termination thereof . . . shall be settled by binding arbitration in accordance with the Rules of the American Arbitration Association.”
The AAA Arbitration Rules provided that the:
“arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the . . . validity of the arbitration agreement.”
The Court ruled that the incorporation of such rule constitutes clear and unmistakable evidence that the contracting parties agreed to arbitrate arbitrability.
UNCITRAL Rules. Chevron Corp. v. Republic of Ecuador, 795 F.3d 200, 207–08 (D.C. Cir. 2015) (holding that the parties’ incorporation of UNCITRAL Arbitration Rules constitutes clear and unmistakable evidence that the parties intended for an arbitrator to decide issues of arbitrability.)
ICC Rules. Apollo Comput., Inc. v. Berg, 886 F.2d 469, 473–74 (1st Cir. 1989) (holding that the parties’ agreement to have all disputes resolved according to the International Chamber of Commerce’s Rules of Arbitration, in which the arbitrator has the power to determine her own jurisdiction, was clear and unmistakable evidence of the parties’ intent to arbitrate arbitrability).
DPR Rules. The arbitration rules of the Dispute Prevention & Resolution, Inc., the predominant ADR service provider in Hawaii, provides in Rule 5 that:
Issues of arbitrability such as whether a valid agreement to arbitrate exists, whether a contract containing a valid agreement to arbitrate is enforceable, and other related issues shall be handled pursuant to the RUAA, Section 6.
Section 6 of the Hawaii Revised Uniform Arbitration Act (RUAA) provides in relevant part the following provisions:
(b) The court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate. …
(d) If a party to a judicial proceeding challenges the existence of, or claims that a controversy is not subject to, an agreement to arbitrate, the arbitration proceeding may continue pending final resolution of the issue by the court, unless the court otherwise orders.
From such provisions, it appears that adoption of the DPR arbitration rules will provide a different result from that reflected by the above cases which have interpreted the arbitrability issue under the arbitration rules of JAMS, AAA, UNCITRAL and the ICC. Hawaii appellate courts have not had occasion to rule on this issue. It is possible that the Hawaii courts will follow the 9th Circuit and defer to the agreement of the parties where they “clearly and unmistakably” indicate their intention that issues of arbitrability be determined by the arbitrator. Parties and their Counsels will need to consciously determine in their arbitration agreements and provide “clearly and unmistakably” for their preferences on whether they wish arbitrability issues to be determined by the court or arbitrator.