Alexander S. Polsky, Esq.
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Phone: 714-501-1321

Who Decides The Validity of an Arbitration Clause? The Supreme's Have Spoken!

WHO DECIDES THE VALIDITY OF A CONTRACT WHEN IT CONTAINS AN ARBITRATION CLAUSE - JUDGE OR ARBITRATOR??


Buckeye Check Cashing Inc. v. Cardegna (US Supreme Court 01/21/2006) has affirmed and re stated the rule of Prima Paint Corp v Flood & Concklin 388 US 395 (1967) and has made it crystal clear that it is for the arbitrator, not a state court, to decide whether a contract, that contains an arbitration clause, is illegal. The issue in Buckeye was whether the entire contract was illegal under the Florida usury laws. It was argued in and decided by the state court that, since the entire contract might be determined to be illegal, all issues arising from the contract should be determined by the state court, including the validity of the arbitration clause.

The Supreme court emphatically said - NO! The core of the Supreme Court's holding:

  1. A challenge to the validity of a contract as a whole, and not specifically to the arbitration clause within it, must go to the arbitrator.
  2. An arbitration clause is severable from the remainder of the contract.
  3. Unless the challenge is to the arbitration clause itself, the issue of the validity of the contract is to be determined by the arbitrator in the first instance.
  4. This rule applies in state and federal courts.
The Conundrum -- To some this is a logical re affirmation of basic arbitration law. To others it is a further eroding of the right to redress in court. Some are concerned that the arbitrator might be impacted by a financial interest in hearing the case, whereas the state court's interest will be unaffected by such issues. What do you think - e mail me at apolsky@jamsadr.com and let me know!

Thanks to Dave Stern of West Coast Casualty, for bringing this case to my attention.

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About Alexander S. Polsky, Esq.
About my ADR practice: The Los Angeles and San Francisco Daily Journal newspapers once wrote: “Alexander S. Polsky, Esq . has demonstrated a unique ability to resolve particularly complex and/or highly emotional cases as a mediator, arbitrator and discovery referee. In doing so, and in naming me one of the Top 20 mediators and arbitrators in California for three consecutive years, this publication and the lawyers who participated in the survey honored my efforts in this field in a most humbling manner. I am equally honored that local bar association annual reviews consistently accord high marks for fairness as an arbitrator and tenacity and commitment as a mediator. I have participated in the resolution of over 7,500 disputes nationwide during my 27 years of practice.

I am available to mediate and arbitrate cases worldwide. In the United States, I have ADR offices (JAMS) in Anaheim, Atlanta, Boston, Chicago, Dallas, Denver, Las Vegas, Los Angeles, New York City, Philadelphia, Sacramento, San Francisco, San Jose, Washington DC.

  • My practice is as a dispute resolution professional and as a special master and arbitrator. As such, it covers many disciplines. They include:
    • Appellate dispute resolution
    • Business and Class Action
    • Construction defect, accident and E&O
    • Domestic relations and child custody
    • Employment and sexual harassment
    • Environmental exposure & remediation
    • Franchise disputes & class actions
    • Government liability/code enforcement
    • Insurance coverage, E&O and bad faith
    • Labor/management disputes/fact-finding, wage & hour claims
    • Maritime
    • Medical negligence & devices (neutral & party arbitrator)
    • Product liability, including mass tort under Federal MDL
    • Real estate-transactional and E&O (licensed real estate broker)
    • Serious injury and wrongful death
I am pleased to serve on the faculty of the University of Southern California where I designed and deliver a course on Negotiation and ADR. I am equally pleased to deliver training in these areas to law firms, associations and corporations worldwide.

I am available exclusively through JAMS ® . To contact me via email, send correspondence to: apolsky@jamsadr.com or direct dial (714) 501-1321, via JAMS ® (714) 937-8233. To schedule a matter contact CEdwards@JAMSadr.com . In addition, hot-linking to my web site will provide access to downloadable copies of my specialty and general CV's as well as articles I have published.

If you have read this far, I am most appreciative. Thank you!






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