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Legal Memorandum: Waiver of Right to Arbitration in VI

Issue: Under the laws of the Virgin Islands, when will a court find that a party has waived its right to arbitration?

Area of Law: Alternative Dispute Resolution, Litigation & Procedure
Keywords: Right to arbitration; Prejudice; Waiver
Jurisdiction: Federal, Virgin Islands
Cited Cases: 482 F.3d 207
Cited Statutes: None
Date: 01/01/2009

Prejudice is the touchstone for determining whether the right to arbitrate has been waived.  There have historically been six non‑exclusive Ehleiter/Hoxworth factors relevant to the waiver inquiry:

[1] the timeliness or lack thereof of a motion to arbitrate … [; 2] the degree to which the party seeking to compel arbitration [or to stay court proceedings pending arbitration] has contested the merits of its opponent’s claims; [3] whether that party has informed its adversary of the intention to seek arbitration even if it has not yet filed a motion to stay the district court proceedings; [4] the extent of its non-merits motion practice; [5] its assent to the [trial] court’s pretrial orders; and [6] the extent to which both parties have engaged in discovery.

Ehleiter v. Grapetree Shores, Inc., 482 F.3d 207, 222 (3d Cir. 2007).  The Court’s application of these factors to the circumstances of the instant case focused primarily, though not exclusively, on the first and final factors, the timeliness of the motion to arbitrate and the extent of discovery.  (Id. at 3.)  The Court’s emphasis on these two factors was entirely proper.  “Under the Hoxworth test, waiver will normally be found only where the demand for arbitration came long after the suit commenced and when both parties had engaged in extensive discovery.”  Ehleiter 482 F.3d at 222-23. The Court properly concluded that in the instant case both factors strongly support a finding of prejudice and waiver.

With respect to the […]

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