An Ohio appellate court determined that a provision allowing one party to unilaterally select an arbitrator was not enough to render the arbitration agreement unconscionable, absent "a direct connection or substantial nexus" between the arbitrator and the selecting party.

In Reno v. Bethel Village Condominium Ass'n, No. 08AP-10, 2008 WL 4078416 (Ohio Ct. App. Sept. 4, 2008), Reno purchased a condo in the Bethel Village condominium complex. The following year, Bethel Village eliminated the street parking in front of Reno's unit. Reno sued Bethel Village.

In response, Bethel Village moved to compel arbitration pursuant to the governing condominium declaration and amendments, which included an agreement to arbitrate. Reno objected and argued that the arbitration agreement was unconscionable. The trial court agreed with Reno and denied Bethel Village's motion to compel arbitration.

On appeal, Bethel Village argued that the trial court erred in concluding that the arbitration agreement was unconscionable. The Court examined the trial court's determinations and found no evidence of substantive unconscionability.

In deciding whether the arbitration agreement was substantively unconscionable, the Court considered whether the terms of the agreement were commercially reasonable. Under Ohio case law, an arbitration agreement that allows one party alone to select an arbitrator does not automatically render the agreement substantively unconscionable.

Instead, there must be evidence of "a direct connection or substantial nexus between the arbitrator and either the party or a related non-party" to demonstrate substantive unconscionability. Further, the Court noted that under Ohio law, a party may challenge the selection of a particular arbitrator prior to the arbitration proceedings. Ohio Rev. Code § 2711.04.

The Court compared these standards against the arbitration agreement contained in the condominium declaration and amendments. The agreement stated that Bethel Village was to select the arbitrator. However, the Court noted that the selection provision included specific directives that an arbitrator must be "independent" and not subject to control by others or be affiliated with a larger controlling unit.

Furthermore, if Reno had felt that the arbitrator selected by Bethel Village was not independent, she had a remedy in that she could request the court to remove the arbitrator prior to the arbitration proceedings and appoint a new one. Additionally, Reno could challenge in court any award issued by an arbitrator that she felt was granted on the basis of evident partiality. Ohio Rev. Code § 2711.10(B).

The Court stated that these concessions in the arbitration agreement cured any claims of substantive unconscionability. The Court reversed the trial court's judgment and ordered the parties to arbitrate their dispute.