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In denying review of an order compelling arbitration, the Texas Court of Appeals ruled that a Texas choice-of-law provision in the underlying contract did not preclude application of the Federal Arbitration Act (FAA) because there was no provision expressly precluding application of the FAA.
In Glenn J. Deadman, P.C. v. SBC, Nos. 04-06-00646-CV, 2007 WL 1200108 (Tex. App. April 25, 2007), the law firm of Glenn J. Deadman (GJD) bought telecommunications services from SBC. When GJD sued SBC for fraud and breach of contract, SBC filed a motion to compel arbitration pursuant to an arbitration clause in the service contract. The trial court granted the motion.
On appeal, GJD argued that the arbitration agreement was not governed by the FAA because the service contract contained a Texas choice-of-law provision. In rejecting this argument, the Court explained that Texas courts do not construe choice-of-law provisions as precluding application of the FAA unless there is an express provision to that effect.
Since the FAA applied to the arbitration agreement, there could be no appellate review of the order compelling arbitration unless GJD showed "clearly and indisputably" that the trial court had no discretion to compel arbitration. In attempting to meet this burden, GJD argued that by virtue of its request for injunctive relief, the dispute was not subject to arbitration because the arbitration agreement exempted requests for injunctive relief. The Court rejected this argument because the trial court had already issued an agreed-upon order for injunctive relief.
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