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In applying the rule that courts decide questions of arbitrability unless there is "clear and unmistakable" evidence that the parties intended otherwise, the Indiana Court of Appeals ruled that the parties intended for the arbitrator to decide questions of arbitrability, but only for disputes arising after the arbitration agreement was formed.
In Harlow v. Parkevich, No. 29A02-0607-CV-569, 2007 WL 1775365 (Ind. Ct. App. June 21, 2007), Parkevich sued attorney Harlow and Ernst & Young, alleging they breached their duties with respect to various trusts. Harlow and Ernst & Young moved to compel arbitration pursuant to an engagement letter containing an ADR provision.
In support of their motion, Harlow and Ernst & Young argued that the arbitrators should decide any questions of arbitrability because the ADR provision stated that "[a]ny issue concerning the extent to which any dispute is subject to arbitration…shall be…resolved by the arbitrators." The trial court denied the motion.
On appeal, the Court applied the rule that courts decide questions of arbitrability "unless there is clear and unmistakable evidence from the arbitration agreement…that the parties intended that the question of arbitrability shall be decided by the arbitrator." In applying this rule, the Court effectively ruled that the answer depended on whether the claim arose before or after the engagement letter was signed.
For claims arising before the engagement letter was signed, the Court ruled that "these claims are so far outside the reach of the ADR provision, [Harlow and Ernst & Young] cannot demonstrate clear and unmistakable evidence that the parties agreed to arbitrate arbitrability of these issues."
The Court reached a different conclusion for the claim arising after the letter was signed. Specifically, the Court found that this claim "appears to be covered" and held that "[a]ny dispute over the arbitrability of this claim must first be presented to the arbitrator" because there was clear and unmistakable evidence that parties "intended to require arbitration over the arbitrability of this claim." The Court remanded the case with instructions to order arbitration on that claim.
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