Arbitration in The United States - Timeliness and The Non-Existence of Arbitration Agreements

Timeliness and The Non-Existence of Arbitration Agreements

Generally, a person who opposes an arbitration award must file a motion to vacate the award within three months of the date in which the award was either entered or delivered. However, it is by no means a settled legal matter whether or not this time limit applies when the person moving to vacate is challenging, not the award itself, but the very contractual obligation to arbitrate in the first place.

Some states, such as Texas, Washington, and Tennessee have held that the time limit does apply, even when you dispute the existence of an arbitration agreement in the first place. Texas is particularly consumer-unfriendly in this respect. In that state, not only does the time limit apply, no matter on what grounds you dispute the award, but even if you are within the three month time limit, "he nonexistence of an arbitration agreement is not one of the grounds upon which an arbitration award may be vacated under the FAA," effectively allowing anyone in Texas to unilaterally file arbitrations against anyone else, contract or no contract, and the other party who did not want to arbitrate is left without recourse.

Missouri takes a slightly more consumer-friendly approach, but still largely favors proponents of arbitration. Missouri recognizes lack of an arbitration agreement as a grounds to vacate, but still requires the person seeking vacature to prove that there was no agreement to arbitrate, effectively requiring the opponent of arbitration to prove a negative.

The United States Court of Appeals for the First Circuit, however, has taken the opposite approach, and argued that the three month time limit is not triggered until there is an agreement to arbitrate. Arkansas has adopted the First Circuit's approach to the issue. However, neither of these cases specify whether or not the opponent to the arbitration has the burden of proof, like in Missouri.