District of Indiana Rejects Venue and Personal Jurisdiction Challenges to Arbitration Agreement Specifying Location for Proceedings

According to the District of Indiana, parties who execute an arbitration agreement specifying a location for the proceedings are bound to arbitrate according to the terms of the agreement.

In Twist v. Arbusto, No. 4:05-CV-0187-JDT-WGH, 2006 WL 1547083 (D. Ind. June 2, 2006), Twist brought an action to compel arbitration regarding investment disputes. Arbusto moved to dismiss the complaint for improper venue, lack of jurisdiction, and failure to state a claim upon which relief can be granted.

The arbitration agreement stated that “any unresolved dispute . . . shall be settled exclusively by arbitration, conducted in Jefferson, Indiana.” Arbusto, a California resident, argued that the arbitration agreement was unconscionable because it required arbitration proceedings to take place in Indiana. The Court held that the terms of the arbitration agreement were enforceable because “implicit in an agreement to arbitrate is consent to enforcement of that agreement.”

Similarly, the Court dismissed the personal jurisdiction challenge because Arbusto “consented to [the] court’s personal jurisdiction over [him] by entering into those agreements, given the arbitration provisions contained therein.” The arbitration agreement was enforceable because both parties agreed to be bound by its terms.

Finally, the Court rejected Arbusto’s argument that Twist failed to state a claim upon which relief can be granted because the entire contract was void. Citing Buckeye Check Cashing, Inc. v. Cardegna, 126 S.Ct. 1204 (Feb. 21, 2006) and Prima Paint Corp. v. Flood & Conklin Manufacturing Co., 388 U.S. 395 (1967), the Court noted the general rule that “a challenge to the validity of a contract as a whole, and not specifically to an arbitration clause within it, must go to the arbitrator, not the court.”