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The Arkansas Court of Appeals held that a tort claim was arbitrable because the parties chose the Federal Arbitration Act (FAA) to govern their arbitration agreement, thus preempting the Arkansas Uniform Arbitration Act (AUAA) and its limitation on predispute agreements to arbitrate tort claims. This holding is consistent with the most recent state court case in California.
In Pest Management, Inc. v. Langer, No. CA05-1387, 2006 WL 2741921 (Ark. Ct. App. Sep. 27, 2006), Langer hired Pest Management to conduct a termite inspection of his home. The parties’ agreement required them to arbitrate disputes under the National Arbitration Forum Code of Procedure. The arbitration agreement provided that the transaction involved interstate commerce and, accordingly, that the FAA governed the agreement.
When Langer sued Pest Management for an allegedly negligent inspection, Pest Management moved to compel arbitration. Even though the arbitration agreement provided for application of the FAA, the trial court denied the motion based on the AUAA’s limitation on predispute agreements to arbitrate tort claims.
On appeal, the Court held that the FAA, not the AUAA, governed the agreement because “[w]here the parties designate in the arbitration agreement which arbitration statute they wish to have control, the court should apply their choice.”
Langer argued that the FAA did not apply because there was no evidence that the transaction involved interstate commerce, which is a prerequisite for FAA application. The Court rejected this argument because the provision for FAA application was “in effect, a stipulation that remove[d] the requirement for proof of connections with interstate commerce.”
Since the AUAA did not apply, the Court remanded the case with instructions to order arbitration.
The Court’s decision is in line with many other jurisdictions in allowing parties to choose the FAA over state arbitration law. See Rodriguez v. American Technologies, Inc., 39 Cal. Rptr. 3d 437 (Cal. Ct. App. 2006) (parties to an agreement can explicitly choose to have their agreement governed by the FAA rather than state law). Parties can avoid a patchwork of state laws by expressly providing for the application of the FAA.
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