Legal Memorandum: Referral to an Arbitrator on the Waiver Issue

Issue: Under the laws of the Virgin Islands, is it for an arbitrator to determine whether a party has waived his or her right to have a matter determined by arbitration?

Area of Law: Alternative Dispute Resolution
Keywords: Referral to an arbiter; Waiver of the right to arbitrate; Determine the waiver issue
Jurisdiction: Virgin Islands
Cited Cases: None
Cited Statutes: None
Date: 01/01/2009

It has been argued that “United States Supreme Court precedent mandates that the arbitrator should decide the existence of a waiver and the matter should be referred to arbitration.”  See, e.g., Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84, (2002).  In Ehleiter, Third Circuit Court of Appeals had occasion to consider Howsam and rejected the assertion that Howsam requires referral to an arbiter on the waiver issue in all cases.  In a careful, thoughtful analysis, the Third Circuit concluded that Howsam is limited and does not mandate that an arbiter determine the waiver issue when waiver is based on litigation conduct and delay in the judicial forum.  The court concluded:

Viewed in isolation, the Supreme Court’s statement in Howsam that the presumption is that the arbitrator should decide allegations of waiver, delay, or a like defense to arbitrability, certainly provides general support for GSI’s position here.  Properly considered within the context of the entire opinion, however, we believe it becomes clear that the Court was referring only to waiver, delay, or like defenses arising from non-compliance with contractual conditions precedent to arbitration, such as the NASD time limit rule at issue in that case, and not to claims of waiver based on active litigation in court.  As the Appellate Division recognized, this latter type of waiver implicates courts’ authority to control judicial procedures or to resolve issues … arising from judicial conduct, which we believe parties would expect the court to decide itself.

Ehleiter, […]

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