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Legal Memorandum: Knowing and Voluntary Waiver

Issue: Whether the Knowing and Voluntary Waiver Standard is the controlling law in an arbitration matter in the Virgin Islands.

Area of Law: Alternative Dispute Resolution
Keywords: Knowing and Voluntary Waiver Standard; Arbitration
Jurisdiction: Federal, Virgin Islands
Cited Cases: 235 F.2d 946; 301 U.S. 292; 149 F.3d 277; 650 A.2d 958; 502 F.3d 212; 267 F.3d 483; 304 U.S. 64; 634 A.2d 538; 304 U.S. 458; 252 F.3d 302; 832 A.2d 1; 178 F.3d 649; 465 U.S. 1; 769 F.2d 126; 400 F.3d 370; 340 F. Supp. 2d 590; 497 F.3d 355; 185 S.W.3d 868; 428 F.3d 1359; 165 U.S. 593; 301 U.S. 389; 146 F.3d 175; 283 F.3d 595
Cited Statutes: 5 V.I.C. § 815; 9 U.S.C. § 2; 24 V.I.C. § 451b; 48 U.S.C. § 1561
Date: 11/01/2007

The statute states in its entirety:  “An agreement that waives a right guaranteed by the Constitution of the United States, is unenforceable, unless the waiver of the right is agreed to knowingly and voluntarily.”  5 V.I.C. § 815.[1]  This statute changes the law governing the enforceability of certain arbitration agreements.

The Court of Appeals for the Third Circuit has very recently reiterated both the fundamental nature of the right to a jury trial and the presumption that exists against the waiver of the right:  “The right to a jury trial in a civil case is a fundamental right expressly protected by the Seventh Amendment to the United States Constitution . . . Because the ‘right of jury trial is fundamental, courts indulge every reasonable presumption against waiver.'”  Tracinda Corp. v. DaimlerChrysler AG, 502 F.3d 212, 222 (3d Cir. 2007) (quoting Aetna Ins. Co. v. Kennedy ex rel. Bogash, 301 U.S. 389, 393 (1937)).  The court of appeals also echoed 5 V.I.C. § 815:  “To be valid, a jury waiver must be made knowingly and voluntarily based on the facts of the case.”  Id. at 222.

The Federal Arbitration Act (FAA) generally compels enforcement of arbitration agreements, but not if those agreements fail to meet standards of state or territorial law that are generally applicable to all contracts.  Arbitration agreements are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”  9 U.S.C. § 2 (emphasis added).  State law can preclude enforcement of […]

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