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Legal Memorandum: Denial of a Motion to Compel Arbitration

Issue: WHETHER A MOTION TO COMPEL ARBITRATION MUST BE DENIED UNDER 24 V.I. CODE 74a(b).

Area of Law: Alternative Dispute Resolution, Employee Law
Keywords: Denial of a motion to compel arbitration; Unconscionable arbitration clause
Jurisdiction: Federal, Virgin Islands
Cited Cases: 352 F. Supp. 2d 903
Cited Statutes: 24 V.I.C. § 74a , 74a(b)
Date: 11/01/2005

Section 74a of Title 24 of the V.I. Code provides as follows:

§ 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) (emphasis added).  Section 74a(b) prohibits an employer from requiring arbitration as a condition of employment.  The Legislature, out of concern for the plight of unemployed men and women seeking employment in the Virgin Islands, passed § 74a(b) in order to make certain that overreaching prospective employers would not take advantage of those desperate for work.  To require signing an arbitration agreement as a condition of continued employment constitutes economic coercion.  The employee in such a situation is forced to give up his or her right to a jury trial in civil disputes as a condition of employment.

Enforcement of § 74a(b) will not contravene the Federal Arbitration Act, (“FAA”), nor is § 74a(b) preempted by federal law.  It is well settled […]

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