Third Circuit Finds Agreement To Arbitrate Unenforceable Because Arbitration Was Directed To An Illusory Forum

Where a Loan Agreement’s arbitration provision stated disputes “will be resolved by Arbitration, which shall be conducted by the Cheyenne River Sioux Tribal Nation by an authorized representative in accordance with its consumer dispute rules and the terms of this Agreement,” the Third Circuit Court held, on review, that the Tribe was required to be involved in the arbitration. This, however, proved impossible, because the Court found no such tribal arbitral forum exists.

The Court found that “[t]he Choice of Arbitrator provision allows the parties to select the AAA, JAMS, or some other agreed upon organization ‘to administer the arbitration… [under] the chosen arbitration organization’s rules and procedures… to the extent that those rules and procedures do not contradict either the law of the [Tribe] or the express terms of [the Loan] Agreement.’” However, the Court declined to extend the Choice of Arbitrator provision to give parties the right to arbitrate before a non-Tribal representative, as it would be irreconcilable with the forum selection clause and the plain language of the provision.

https://www.jdsupra.com/legalnews/third-circuit-finds-agreement-to-50563/