Third Circuit Hands Khan Loss in Arbitration Case, Maroons Him in Legal Equivalent of Seti Alpha 6

It’s no secret that The Wrath of Khan is, without question, the best of the Star Trek movies.  It’s also no secret that, generally speaking, courts will bend over backwards to enforce arbitration provisions, and we’ve previously covered what can happen when the arbitrator/arbitration forum you specify in your contract either no longer exists or can’t arbitrate your case–such as the National Arbitration Forum. (See our prior posts on various arbitration topics here.)  So, how are the two connected?

Well, the Third Circuit, had not chimed in on such issues until it decided Khan v. Dell a couple of weeks ago (see what we did there?).  This case, too, involved the inability of the NAF to hear a case due to its consent judgment with the State of Minnesota.  Other courts, including the district court in this case (as well as our own Indiana Court of Appeals), have held that the naming of the NAF was “integral” to the arbitration agreement, and since the NAF couldn’t hear the case, that meant there was no enforceable arbitration agreement. But the Third Circuit, citing the “liberal federal policy in favor of arbitration,” held that the unavailability of the NAF was really just a “lapse” in the arbitration process, and so section 5 of the FAA permitted the court to name a replacement.

So, what’s the takeaway? Well, generally speaking, most courts will enforce arbitration agreements as they are written–unless, of course, what’s written is impossible to enforce, in which case some courts will toss out the arbitration provision, whereas others will force the parties to arbitrate before an arbitrator or arbitration forum they didn’t agree to.

Also, if this Khan is anything like Ricardo Montalban, expect his revenge to be awesomely overacted.

About Brian Jones

I represent clients in all aspects of business litigation, but focus my practice on complex litigation and arbitration matters concerning insurance and reinsurance, antitrust, class actions, securities, real estate disputes, and contract matters. I am the co-chair of the Bose McKinney & Evans Insurance Group. I was listed in the 2017 and 2016 "Best Lawyers in America" for Insurance Coverage and named a "Rising Star" in Insurance Coverage by Super Lawyers in Indiana in 2014. I was also named a "Rising Star" in Business Litigation by Super Lawyers in Indiana in 2013 and 2012, and a 2010 “Rising Star” in Business Litigation in Texas. I am a member of the State Bars of Indiana and Texas, the Defense Research Institute, a former member of the Pro Bono College of the State Bar of Texas, and I am licensed to practice before all state courts in Indiana and Texas, as well as all federal courts in Indiana, the Northern, Western, and Southern Districts of Texas, the Northern District of Illinois, and the United States Courts of Appeals for the Fifth, Seventh, and Eleventh Circuits. I received my bachelor’s degree, cum laude, in political science and my master’s degree in teaching from Trinity University, where I was elected to Phi Beta Kappa. I received my doctor of jurisprudence degree from the University of Texas School of Law, where I was the Director of Communications for the Legal Research Board and a member of the Phi Delta Phi Honor Society. Before attending law school, I taught high school geography, government and economics in San Antonio, Texas.
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