The concept of arbitrability under the Florida Arbitration Code.

• Author: Cavendish, Michael

The procedural defense of arbitration can be the first matter sophisticated defendants assert in public trial courts during commercial lawsuits. In Florida, decisions on the question of what commercial lawyers call arbitrability (1) give rise to immediate rights of interlocutory appeal, and resolving this question can freeze lawsuits until a resulting appellate litigation process ends. In the context of commercial law, corporate litigation, and litigation management and budgeting, the concept of arbitrability seems of perpetual importance.

Private parties consent to arbitration by making contract language agreeing to arbitration, for example, by accepting that an arbitral organization such as the American Arbitration Association will have jurisdiction over the resolution of a dispute based on a written agreement. Arbitral tribunals have familiar mechanisms for the filing of a new private arbitration, processes similar to those employed by clerks of courts for the filing of a new public lawsuit.

Sometimes contracting parties will disagree over whether a dispute should proceed in private arbitration. A plaintiff may file a claim as a public lawsuit and the defendant may object, citing arbitration language in the parties' written agreement. When these disagreements arise over which tribunal, private or public, should take jurisdiction, the Florida Arbitration Code, F.S. [section]682.01 et seq., provides that any party may apply by motion for an order directing the parties to a lawsuit to comply with a governing arbitration clause. (2)

When motions of this nature are submitted, the party seeking to compel arbitration has the initial burden of establishing that an agreement to arbitrate exists. (3) These contests over arbitrability can consume over-large quantities of litigation resources because of the complexity resulting from combinations of contract language, the character of pleaded claims, and the rules, corollaries, maxims, and presumptions within the law of arbitration.

The concept of arbitrability under the Florida Arbitration Code is much-litigated and deserves reflective study. The greater share of analysis of arbitrability has traditionally been reserved to the Florida Arbitration Code's federal counterpart, the Federal Arbitration Act. The FAA is non-jurisdictional, meaning that it does not apply to Florida disputes not arising from interstate commerce, or not presenting some other basis of federal jurisdiction. (4) The size, vitality, and importance of Florida as a center of commercial activity and a unique legal jurisdiction explains why a large quantity of disputes over arbitrability each year require a Florida Arbitration Code-based analysis and occur outside of interstate commerce. This article discusses the Florida law of arbitrability and invites consideration of the subtle complexity of the concept.

A Pro-arbitration Policy: The Rule of Maximum Breadth

Florida courts view arbitration as a preferred mechanism of dispute resolution, and it is often repeated in Florida courts that any doubt regarding the arbitrability of a claim should be resolved in favor of allowing arbitration. (5) The Florida Supreme Court has opined that under the Florida Arbitration Code "courts [will] indulge every reasonable presumption to uphold proceedings resulting in an award."6 Observers of published judicial thought on Florida's law on arbitration recount as a matter of doctrine that there is "a strong public policy favoring arbitration."7 This policy runs parallel to the pro-arbitration policy followed by federal courts when applying the FAA. (8)

Florida law, and specifically, the Florida Arbitration Code, controls arbitration clauses where interstate commerce is not implicated. (9) Federal law, via the FAA, controls arbitration clauses when a matter of interstate commerce is involved. (10)

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Florida and federal courts interpreting the Florida Arbitration Code and the FAA have fostered highly similar tests (11) for arbitrability--that quality which makes a legal claim or right subject to an enforceable agreement to submit it to the authority of private arbitration instead of the default forum, the public courts of the sovereign federal and state governments. The determination of whether a claim is subject to arbitration under the Federal Arbitration Act is two-fold: Courts are to decide 1) whether the parties agreed in writing to arbitrate their disputes; and 2) whether the claims raised fall within the scope of the arbitration provision. (12) Under the Florida Arbitration Code, the analysis for arbitrability proceeds in three parts: 1) whether a valid written agreement to arbitrate exists; 2) whether an arbitrable issue exists; and 3) whether the right to arbitration was waived. (13)

Florida courts applying the Florida Arbitration Code, much like federal courts applying the FAA, announce that they generally lean toward resolving all doubts in a disagreement over arbitrability in favor of arbitration, rather than against it. (14) This gloss of public policy gives rise to a judicially employed rule of construction for arbitration language in a valid contract--the rule of maximum breadth. This rule instructs that arbitration clauses are to be given the "broadest possible interpretation to accomplish the salutary purpose of resolving controversies out of court." (15) And in general, this presumptioncreating rule persuading courts to resolve doubts in favor of arbitrability applies equally to analyses of defenses to arbitrability, such as waiver. (16)

A Corollary Emerges: Against Fouling of Contracting Intent

After encountering the preceding pro-arbitration rules and glosses of policy, to the uninitiated, the concept of arbitrability may appear as a monolith. This is a misleading impression. A close inspection of Florida arbitration law reveals fissures and craters in this seemingly smooth surface. Florida courts also instruct that, under the Florida Arbitration Code, no party may be forced into arbitrating something they did not agree to arbitrate, notwithstanding the general rule favoring arbitration. (17) A second way of stating this idea is to notice that Florida courts teach that contracts providing for arbitration are to be carefully construed so as not to force a nonarbitrable issue into arbitration. (18) More fundamentally, at least one Florida court interpreting the Florida Arbitration Code has opined that litigants may resort to the courts to challenge an alleged right to arbitrate on the basis that no meeting of party intents ever occurred. (19)

We are on to a thick corollary that interdicts the strong pro-arbitration preference found in Florida law and public policy, and what the courts are getting at here is the idea of contracting intent. Florida courts will, notwithstanding general policies favoring arbitration by default, allow that a contract providing for arbitration can only be said to make a particular dispute arbitrable if it shows the parties' intent to submit that particular dispute to arbitration. (20) Stated another way, our corollary guides that when the language of an arbitration clause clearly erects arbitral boundaries preventing a party from appropriately arbitrating some types of claim, then a court interpreting the clause is left to conclude that the contracting parties intended that the extra-contractual or extra-textual claim must be non-arbitrable. (21) This preference against the fouling of contracting intent is the counterpoint to the more visible rule of maximum breadth discussed above.

There are maxims supporting this corollary in almost equal number to the reported judicial language supporting the expansive rule of maximum breadth, such as, for example, "i]t is the intention as expressed by the language employed in the agreements that governs, not the after-the-fact testimony of the parties." (22) Within this corollary, intent, (23) subject to the common law and evidence code filters restricting how contracting intent may be demonstrated, will seem to carry the day in a dispute over arbitrability.

Potentially complicating the process of sorting out litigant intent between the rule and the corollary are questions of what to do with statutory claims and claims sounding in tort. Statutory claims can be arbitrable where the arbitral process is viewed as not an impairment to the remedial function of the statute that is...