Opinion ID: 2054609
Heading Depth: 1
Heading Rank: 7

Heading: General Nature of Agreement to Arbitrate

Text: The federal Arbitration Act, 9 U.S.C. § 1 et seq. (1994), brings within its purview contracts involving interstate commerce. §§ 1 and 2. See, also, Southland Corp. v. Keating, 465 U.S. 1, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984); Lippus v. Dahlgren Mfg. Co., 644 F.Supp. 1473 (E.D.N.Y.1986); Kelley v. Benchmark Homes, Inc., 250 Neb. 367, 550 N.W.2d 640 (1996). Smith Barney is a Delaware corporation having its principal place of business in the State of New York and conducts a nationwide business, as did its predecessor. The fund is located and managed in Nebraska, and the trustees are Nebraska residents. As the parties' agreement in the instant case empowered Smith Barney to advise the fund in investment matters, the transactions in question clearly involved interstate commerce. Accordingly, the act governs all questions arising under the client agreement before us. See Dowd v. First Omaha Sec. Corp., 242 Neb. 347, 495 N.W.2d 36 (1993). The arbitration act creates a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the [a]ct and represents a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary. Moses H. Cone Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The U.S. Supreme Court has held that arbitration `is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.' AT & T Technologies v. Communications Workers, 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986). A party has a constitutional right to adjudication of a justiciable dispute, and the law will not find a waiver of that right absent `direct and explicit evidence of actual intent' of a party's agreement to do so. McCarthy v. Azure, 22 F.3d 351, 358 n. 9 (1st Cir.1994). The arbitration act prohibits a court from compelling arbitration unless the court first satisfies itself that the issue is referable to arbitration under such an arbitration clause. 9 U.S.C. § 3. Thus, whether an issue is to be decided by arbitration is a matter of the parties' contractual intent. Mastrobuono v. Shear son Lehman Hutton, Inc., 514 U.S. 52, 115 S.Ct. 1212, 131 L.Ed.2d 76 (1995). In Mastrobuono, the U.S. Supreme Court held that the arbitration act not only declared a national policy favoring arbitration, but actually withdrew the power from the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration. Therefore, the threshold question in the instant case is which body is empowered to determine the arbitrability of this case, a judicial tribunal or an arbitrator. As noted in First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995): Just as the arbitrability of the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute, [citations omitted], so the question who has the primary power to decide arbitrability turns upon what the parties agreed about that matter. Did the parties agree to submit the arbitrability question itself to arbitration? If so, then the court's standard for reviewing the arbitrator's decision about that matter should not differ from the standard courts apply when they review any other matter that parties have agreed to arbitrate. (Emphasis in original.) When deciding whether the parties agreed to arbitrate a certain matter, including arbitrability, courts generally are to apply ordinary state law principles governing the formation of contracts. First Options of Chicago, Inc., supra . As noted in First Options of Chicago, Inc., 514 U.S. at 945, 115 S.Ct. 1920, the question of who should decide arbitrability is rather arcane and may commonly be overlooked during negotiations. See, also, AT & T Technologies, supra . Therefore, courts should hesitate to transform silence or ambiguity into an agreement to arbitrate arbitrability. The basic objective in this area is to ensure that commercial arbitration agreements, like other contracts, are enforced according to their terms and according to the intentions of the parties. First Options of Chicago, Inc., supra . Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by a court, not an arbitrator. AT & T Technologies, supra . In AT & T Technologies, supra, and First Options of Chicago, Inc., supra, the U.S. Supreme Court created a presumption that the courts would decide arbitrability questions involving a time bar, unless the parties had clearly and unmistakably decided otherwise. However, outside of time-bar questions, the opposite presumption applies, and any doubt concerning the scope of arbitrable issues is to be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability. Moses H. Cone Hospital, supra .