|
An Ohio appellate court held that a provision for nonbinding arbitration was unenforceable under Ohio law.
In Medallion Northeast Ohio Inc. v. SCO Medallion Healthy Homes, Ltd., No. 23214, 2006 WL 3825204 (Ohio Ct. App. Dec. 29, 2006), Medallion was a franchisee of SCO and a dispute arose regarding duties under the franchise agreement. Medallion brought suit and SCO moved to compel arbitration based on an alternative dispute resolution provision in the parties' agreement. The trial court granted SCO's motion and Medallion appealed.
The Court agreed with Medallion that nonbinding arbitration does not constitute arbitration and that the dispute resolution provision was not enforceable. "[I]n order for a dispute resolution provision to be deemed 'arbitration' and enforceable, its award must be final and binding." See Miller v. Gunckle, 96 Ohio St.3d 359 (Ohio 2002).
The provision provided that parties must "exhaust all means, including mediation or arbitration, prior to filing litigation." There is no indication of whether the means chosen "would be binding on the parties" and the Court refused to enforce the arbitration agreement.
Subscribe to a free weekly update on ADR case law and
legislation
|