Read Before You Sign – Update in Texas Arbitration Law

An arbitration agreement sitting under a gavel.

Nobody likes to read long, boring contracts. Most of the time when we come across a 20-plus-page contract, we briefly scan the text, sign on the dotted line, and move on with our lives.

However, you need to take a closer look to see whether your contract contains an arbitration clause before you sign.  Agreeing to arbitration will impact your right to a jury trial in the future.

On May 20, 2016, the Texas Supreme Court made a ruling that strengthened the incontestability of arbitration awards.  In Hoskins v. Hoskins, the Court addressed whether a party to arbitration could vacate an award because the arbitrator manifestly disregarded the law.  Hoskins involved a trust dispute between a mother and two of her sons.  After the husband’s death, property disputes led to litigation.  The parties eventually agreed to settle their claims.  The settlement agreement included a provision stating that any disputes over performance would be resolved by mediation and, if unsuccessful, by binding arbitration.  Years later, another dispute arose and the parties went to arbitration.

At arbitration, the arbitrator dismissed additional claims brought by one of the sons without a hearing.  The son filed a motion to vacate the arbitration award with the trial court, saying that the arbitrator disregarded established Texas law.  The trial court denied the son’s motion to vacate, and the court of appeals affirmed.  On May 20, 2016, the Texas Supreme Court agreed that a party cannot vacate an arbitration award on the basis of manifest disregard of the law by the arbitrator.

What does this mean for you?

It means that if you agree to arbitration and have a dispute, the arbitrator can disregard the law and there is nothing you can do about it.  Do not sign an agreement with an arbitration clause blindly.  Consult with an attorney at Hammerle Finley Law Firm to review your contract before signing away your rights to a jury trial.

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The information contained in this article is general information only and does not constitute legal advice.