NAFTA Traders, Inc. v. Margaret A. Quinn, No. 08-0613 (docket info)
Today, the Texas Supreme Court will hear oral arguments about a critical case for arbitration agreements under Texas law.
At stake is whether the same constraints that the U.S. Supreme Court placed on arbitration agreements in its controversial Hall Street decision will also apply to arbitration agreements under the Texas Arbitration Act.
Under Hall Street, federal arbitration is now an all-or-nothing endeavor. If you choose arbitration, your only option for a substantive “appeal” is to an appellate arbitration panel rather than a sitting court. (( I wrote about Hall Street in this post, which also discussed its possible impact on the pending Bison Building Materials Ltd. v. Aldridge case (still pending – docket information here).
You can learn more about Hall Street itself through this page on the Oyez website. ))
The most obvious impact is on the availability of “expanded judicial review” — where parties agree to arbitrate most of their dispute (often the factual disputes) and to permit judicial review of certain legal questions. The result is a hybrid form of litigation, chosen by the parties.
A less obvious impact of Hall Street is on the traditional grounds for vacating arbitration awards, such as the argument that the arbitrator had “manifestly disregarded” the law.
There is an active circuit split on whether Hall Street also wipes out those common-law arguments. The Fifth Circuit has lined up on the side of those who say Hall Street entirely forecloses such theories.
An overview of that debate and the Citigroup opinion from the Fifth Circuit — including links to a paper in which my contracts professor gave Justice Souter a C-minus on his majority opinion in Hall Street — is available in the post “Fifth Circuit: Life After Hall Street” at Disputing.
In today’s NAFTA Traders argument, the Texas Supreme Court is being asked to decide (1) if the Texas Arbitration Act contains the same limitations in its own text or (2) if the federal statute preempts the ability of Texas to apply looser rules to arbitration agreements that could have been drafted under the federal act.
How the Texas Supreme Court construes the Texas statute could mean a great deal for arbitration in Texas.