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Legal Memorandum: Arbitration Agreement in Employment Contracts

Issue: Under the law of the Virgin Islands, when is an arbitration agreement in an employment contract enforceable?

Area of Law: Alternative Dispute Resolution, Employee Law
Keywords: Employment contract; Arbitration agreement; Enforceability
Jurisdiction: Virgin Islands
Cited Cases: None
Cited Statutes: 24 V.I.C. § 74a (2004);
Date: 03/01/2007

In 2002, the Virgin Islands Legislature added § 74a to Title 24 of the V.I. Code.  Section 74a provides:

§ 74a   Arbitration

(a)        Notwithstanding an employment contract that provides for the use of arbitration to resolve a controversy arising out of or relating to the employment relationship, arbitration may be used to settle such a dispute only if:

(1)        the employer or employee submits a written request after the dispute arises to the other party to use arbitration; and

 

(2)        the other party consents in writing not later than sixty (60) days after the receipt of the request to use arbitration.

(b)        An employer subject to this chapter may not require an employee to arbitrate a dispute as a condition of employment.

24 V.I.C. § 74a (2004). 

The plain reading of subpart (a) requires a party wishing to initiate arbitration to submit a written request to the other party after the dispute arises.  If the other party refuses to consent, the claims are not subject to arbitration. 

Subpart (b) was enacted out of concern for the plight of unemployed men and women seeking employment in the Virgin Islands, in order to make certain that overreaching prospective employers would not take advantage of those desperate for work.  To require signing of an arbitration agreement as a condition of employment constitutes economic coercion. 

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