|
The Supreme Court of Mississippi held that non-signatories to a contract had no right to compel arbitration where the plain language of the arbitration agreement extended the agreement only to the contract's signatories.
In Qualcomm Inc. v. American Wireless License Group, LLC, Nos. 2005-IA-01827-SCT, 2005-IA-01894-SCT, 2005-IA-01829-SCT, 2005-IA-01995-SCT, 2005-IA-01841-SCT, 2005-IA-01883-SCT, 2005-CA-01895-SCT, 2007 WL 3378563 (Miss. Nov. 15, 2007), Leap Wireless transferred shares to American Wireless pursuant to a contract that contained an arbitration agreement. Years prior to the transfer, Leap had been a subsidiary of Qualcomm, although American Wireless alleged that Qualcomm still exercised control over Leap Wireless during the time of the transfer.
Subsequent to Leap Wireless' bankruptcy petition, shareholders of American Wireless brought suit against the officers and directors of Leap Wireless and Qualcomm claiming violations of federal and state securities laws. Qualcomm's motions to dismiss and to compel arbitration were denied by the circuit court and it appealed.
This Court found that Qualcomm could not compel arbitration, in spite of listing several exceptions to the general rule that non-signatories may not be bound to a contract.
The Court found that the parties did not agree to extend the agreement to non-signatories. The language of the arbitration agreement extended only to American Wireless and Leap Wireless by stating that disputes may be submitted to arbitration by either the buyer or the seller. Qualcomm was neither the buyer nor the seller and was thus, "not entitled to enforce arbitration."
Accordingly, the Court reasoned "because the language of the contract is unquestionable as to who may seek arbitration, the trial court did not err in refusing to compel arbitration."
Subscribe to a free weekly update on ADR case law and
legislation
|