DAN MORALES 

ATTORSEY GENERAL 

@ffice of tly EWmtep @enera 

.&date of Qexae 

June 17,1992 

Honorable Carl A. Parker 

Chairman 

Subcommittee on Insurance 

Texas State Senate 

P. 0. Box 12068 

Austin, Texas 78711 

Opinion No. DM-127 

Re: Whether V.T.C.S. article 224 et seq., 

the Texas general arbitration statute, 

violates article I, section 13 of the Texas 

Constitution, the open courts amendment 

(RQ-199) 

Dear Senator Parker: 

You have requested our opinion as to whether V.T.C.S. article 224 et seq., 

the Texas general arbitration statute, violates article I, section 13 of the Texas 

Constitution, the “open courts” provision. Article 224, first enacted in 1965, 

provides: 

A written agreement to submit any existing controversy to 

arbitration or a provision in a written contract to submit to 

arbitration any controversy thereafter arising between the 

parties is valid, enforceable and irrevocable, save upon such 

grounds as exist at law or in equity for the revocation of any 

contract. A court shall refuse to enforce an agreement or 

contract to submit a controversy to arbitration if the court finds 

it was unconscionable at the time the agreement or contract was 

made. Provided, however, that none of the provisions of this 

Act shall apply to: 

(a) any collective bargaining agreement between an 

employer and a labor union: 

(b) any contract for the acquisition by an individual person 

or persons (as distinguished from a corporation, trust, partnership, association, or other legal entity) of real or personal 

property, or services, or money or credit where the total 

consideration therefor to be paid or furnished by the individual 

p. 659 
Honorable Carl A. Parker - Page 2 (DM- 12 7 1 

is SSO,OOO orless, unless said individual and the other party or 

parties agree in writing to submit to arbitration and such written 

agreement is signed by the parties to such agreement and their 

attorneys; 

(c) any claim for personal injury except upon the advice of 

counsel to both parties as evidenced by a written agreement 

signed by counsel for both parties. A claim for workers’ 

compensation shall n&t be submitted to arbitration under this 

Act. 

With certain exceptions, the statute declares a prior written agreement to arbitrate 

to be “valid, enforceable and irrevocable,” except where the agreement itself is 

tainted, for example, by fraud, partiality on the part of the arbitrator, absence of an 

effective arbitration agreement,’ or unconscionability. 

Article I, section 13 of the Texas Constitution provides in part: 

All courts shaIl be open, and every person for an injury done 

him, in his lands, goods, person or reputation, shall have remedy 

by due course of law. 

The Texas Supreme Court has indicated that establishing an “open courts” violation 

requires compliance with a two-pronged test. First, the litigant “must show that he 

has a well-recognized common-law cause of action ,$at is being restricted.” In 

addition, “he must show that the restriction is unreasonable or arbitrary when 

balanced against the purpose . . . of the statute.” Momw v. Sterling Dmg, Inc, 787 

s.w.2d 348,355 (Tex 1990). 

InitiaIiy, we note that every legislative act carries with it a presumption of 

COllStitUtiOMIity. 

It is to be presumed that the Legislature has not acted 

unreasonably or arbitrarily; and a mere difference of opinion, 

where reasonable minds could differ, is not a sutEcient basis for 

striking down legislation as arbitrary or unreasonable. 

%‘.T.C.S. art. 237. 

p. 660 
Honorable Carl A. Parker - Page 3 (DMy127 ) 

Sax v. Votteler, 648 S.W.2d 661,664 (Tex. 1983) (quoting Smith v. Davir, 426 S.W.2d 

827,831 (Tex. 1968)). 

Article J, section 13 “prohibits legislative bodies from arbitrarily withdrawing 

all legal remedies from one having a cause of action well established and well 

defined in the common law.” Canilb v. Hidalgo County Water Dirt. No. I, IT1 

S.W.2d 633, 636 (Tex. App.-Corpus Christi 1989, no writ). The clause “does not, 

however, apply to a statutory cause of action which expands the rights of an 

individual beyond those granted by the common law.” Id 

Many of the causes of action covered by article 224, et seq., are stafuto~ 

rather than common-law causes of action, and therefore fall outside the ambit of 

article I, section 13. See. e.g., Bus. & Com. Code 0 17.41 et seq., (Deceptive Trade 

Practices - Consumer Protection Act); Ins. Code arts. 21.21 (Unfair Competition 

and Unfair Practices), 21.21-2 (Unfair Claim Settlement Practices Act). 

Furthermore, article 224, ef seq., does not itself deprive a litigant of a remedy for any 

wrong he has suffered. Eather, it &nits his choice of remedy to one that he himself 

has pre-selected. Even in those instances in which arbitration is mandatory, an 

aggrieved party may still bring a cause of action to show that the arbitration 

agreement itself is tarnished by fraud, unconscionability, or invalidity. To the 

extent, however, that article 224, et seq., does impose restrictions on the commonlaw right to litigate those disputes which cominue to be covered by article J, section 

13, we do not believe that a court would find that those restrictions are either 

nnreasonable or arbitrary. 

Although the Texas general arbitration act has been in effect since 1965, 

common-law arbitration continues to exist in this state. L. H. Lay Co. v. Ci@ of 

Lubbock, 559 S.W.2d 34&3Sl-52 (Tex. 1977). Prior to L H. Lacy Company, “the 

Texas common law rule was that either party could revoke the agreement to 

arbitrate at any time” prior to the actual award WZie Indq~. School Disk v. TMC 

Found, Inc, 770 S.WZd 19, 21 (Tex. App.-Dallas 1989, writ dism’d w.0.j.). In 

L. H. Lucy Company, the court, while finding it unnecessary to actually overturn the 

common-Iaw rule, made clear that it bad no future in Texas. BVie Independent 

School D&&t, 770 S.W.2d at 21. Chief Justice Greenhill took the opportunity to 

extol the virtues of arbitration: 

Under the traditional common law, courts have refused 

specific enforcement to agreements to arbitrate @ruz disputes. 

[Emphasis in original.] Either party to an executory agreement 

P- 661 
Honorable Carl A. Parker - Page 4 (DM-127) 

providing for arbitration of future disputes has been allowed to 

revoke the agreement at any time before the arbitration 

proceeding resulted in an award. The only penalty for such 

revocation consisted of damages, if any, for breach of 

contract.. . .The rationale behind these rules rested on a “public 

policy” argument against allowing private persons to oust the 

courts of their jurisdiction to determine the rights and liabilities 

of parties to a contract. This notion was a result of early English 

precedent which was transferred to the United States and to 

Texas through our adoption of the common law. The doctrine 

has long since been abandoned in England by case law and by 

statute, and an increasing number of American jurisdictions 

have rejected the rationale by adopting modem and 

comprehensive arbitration statutes. . . . The doarine ws evolved 

in~e~whencourtcongestionwarnotamajorp~b~aritir 

today, and in modem tbnes a policy encowtzgbag agteements to 

arbitrate is p@kmbk In addition to alkvk&g some meavue of 

rhebwdenonthecourtr,arbitmtioninacommercialcontextisa 

valuable tool which piwides buiness people, and all ulizem, with 

greata jlexibility, efficient, and privaq....While it is 

unnecessary in this case to alter common law arbitration rules, 

the policy of refusing specific enforcement to executory 

arbitration agreements is not justifiable wheri the case fits within 

the common mold 

L H. Lucy Compwy, 559 S.W.2.d at 352 (emphasis added, footnotes omitted ).2 

p. 662 
Honorable Carl A. Parker - Page S (DM-127 ) 

suggesting that the easy revocation of arbitration agreements under common law 

was based on an outmoded idea of public policy. When such sentiments are coupled 

with the presumption of constitutionality which every statute commands, we believe 

that it is even more clear that the court would find that article 224, er seq., does not 

impose any restrictions upon a litigant’s right to judicial redress which are 

“unreasonable or arbitrary when balanced against the purpose of the statute.” 

Accordingly, we conclude that article 224, er seq., does not contravene article I, 

section 13 of the Texas Constitution. 

SUMMARY 

V.T.C.S. article 224 et seq., the Texas general arbitration 

statute, does not contravene article I, section 13 of the Texas 

Constitution, the “open courts” provision. 

DAN MORALES 

Attorney General of Texas 

WILL PRYOR 

First Assistant Attorney General 

MARYKELLER 

Deputy Assistant Attorney General 

RENEAHIcKs 

Special Assistant Attorney General 

MADELEINE B. JOHNSON 

Chair, Opinion Committee 

Prepared byRick Gilpin 

Assistant Attorney General 

p. 663