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In a dispute arising from the sale of a motor vehicle, the Mississippi Supreme Court held that the lower court exceeded its authority in deciding whether the buyer's allegations of fraud fell within the scope of the parties' arbitration agreement because there was clear and unmistakable evidence that the parties had agreed to submit questions of arbitrability to the arbitrator.
In Greater Canton Ford Mercury, Inc. v. Ables, No. 2005-CA-01316-SCT, 2007 WL 273502 (Miss. Feb. 1, 2007), Ables bought a motor vehicle from Greater Canton Ford Mercury (GCFM) on an installment contract. The contract contained an arbitration clause which applied to all claims relating to the contract, including "claims regarding the interpretation, scope or validity of th[e] clause or arbitrability of any issue."
Despite the arbitration clause, Ables and two other buyers sued GCFM for allegedly misrepresenting that the vehicles being sold were "certified pre-owned vehicles." GCFM filed a motion to compel arbitration. In opposing the motion, Ables argued that the arbitration clause did not apply to the alleged fraud. The trial court denied the motion.
On appeal, GCFM argued that the trial court had no authority to decide whether the arbitration clause applied to the alleged fraud because the parties had agreed to submit questions of arbitrability to the arbitrator.
The presumption is that questions of arbitrability are decided by the court. However, since arbitration is a matter of contract, parties can overcome that presumption by "clearly and unmistakably" delegating questions of arbitrability to the arbitrator. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944-45 (1995); AT&T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 649 (1986).
Applying that rule, the Court found clear and unmistakable evidence that Ables and GCFM had agreed to arbitrate questions of arbitrability. In support of this finding, the Court pointed out the language in the arbitration clause specifying the "arbitrability of any issue" as a matter for arbitration.
Based on this finding, the Court held that the trial court exceeded its authority in deciding whether the alleged fraud fell within the scope of the arbitration agreement. Accordingly, the Court remanded the case with instructions to order arbitration.
Rule 20F of the National Arbitration Forum Code of Procedure authorizes arbitrators to decide questions regarding the scope of an arbitration agreement, including arbitrability. See Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366 (Fed. Cir. 2006) (finding clear and unmistakable intent to arbitrate questions of arbitrability based solely on the incorporation of rules authorizing arbitrators to rule on the scope of an arbitration agreement). Parties may also clearly and unmistakably show their intent to arbitrate questions of arbitrability by expressing their intent within the arbitration agreement itself.
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