Legal Memorandum: Referring a Matter to Arbitration

Issue: Who bears the burden to show whether a matter is properly referable to arbitration?

Area of Law: Alternative Dispute Resolution
Keywords: Referable to arbitration; Burden to show
Jurisdiction: Federal, Virgin Islands
Cited Cases: 328 F.3d 1165; 514 U.S. 938; 466 F.3d 577; 169 F.3d 501; 151 F.3d 132; 475 U.S. 643
Cited Statutes: None
Date: 08/01/2008

It is well-established that the party moving to compel arbitration and seeking a stay pending the outcome of arbitration bears an initial burden to show the matter is properly referable to arbitration.  Am. Fin. Capital Corp. v. Princeton, No. CIV. A. 95-4568, n.12 (E.D. Pa. Mar. 20, 1996); see Zurich American Ins. v. Watts Indus., Inc., 466 F.3d 577, 580 (7th Cir. 2006) (to compel arbitration a party must show an agreement to arbitrate, a dispute within the scope of the agreement and a refusal by the opposing party to proceed to arbitration); In re Mercury Constr. Corp., 656 F.2d 933, 939 (4th Cir 1981) (the party seeking to compel arbitration must establish the parties have an agreement to arbitrate and that it was breached), aff’d sub nom. Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983);  Nederlandse Erts-Tankersmaatschappij, N.V. v. Isbrandtsen Co., 339 F.2d 440, 442 (2d Cir. 1964) (defendants who sought the stay have the burden of establishing such stay is warranted); Miletic v. Holm & Wonsild, 294 F. Supp. 772, 774 (S.D.N.Y. 1968) (“The burden is on the party seeking a stay to satisfy the court that a matter is referable to arbitration.”).

Thus, to rule on a motion to compel and to stay, the court must first decide whether the moving party has established that a particular matter is referable to arbitration.  To make the determination, the court must conduct a two-question inquiry into the “gateway […]

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