Mandatory forum selection clauses can render an arbitration agreement unenforceable if the forum is unavailable when the dispute arises. In Renzy v. Tijerina (Aug. 25, 2010), the parties’ arbitration agreement specified that disputes “shall be resolved” by the National Arbitration Forum (NAF), but when the dispute arose the NAF no longer handled the kind of consumer claim made by the plaintiff. The district court held that the NAF designation was a mandatory, integral part of the agreement and declined to appoint an alternative forum or arbitrator. The Fifth Circuit affirmed the denial of the defendants’ motion to compel arbitration.
The arbitration world’s attention is certainly locked in on AT&T Mobility LLC v. Concepcion, pending before the United States Supreme Court, in which more than twenty-five amicus curiae briefs have been filed. This case presents the question of whether the Federal Arbitration Act (FAA) preempts California’s rule that a class action waiver provision in a consumer arbitration agreement is unconscionable and unenforceable when, in essence, the damages available for the claim do not provide sufficient incentive for the consumer to pursue individual arbitration. In light of the Supreme Court’s arbitration decisions last Term, there are expectations that its decision in this case will reduce or eliminate the uncertainty that presently exists in many jurisdictions concerning the application of state law unconscionability principles to class action waivers in arbitration agreements.