Review the Arbitration Providers' Rules Carefully
Courts regularly find that the incorporated rules of an ADR provider are binding. Review them carefully, therefore, to assure that there is nothing in those rules which imposes the unexpected upon your clients.
June 21, 2023 at 10:29 AM
7 minute read
Abraham J. Gafni, Neutral, Mediator and Arbitrator with ADR Options. Courtesy photo
ADR
Mandatory arbitration clauses have proliferated in online consumer contracts in recent years. And with their increased use, courts have been confronted with whether the terms of those clauses, which often incorporate the arbitration rules of an arbitration provider, should be binding. In particular, much attention has been given to whether the courts or the arbitration provider's arbitrator have the authority to resolve the gateway issue of whether a valid agreement to arbitrate exists.
A recent case from California resolved this issue based upon the differing arbitration provisions contained in the rules of two of the nation's largest arbitration providers.
The case from the U.S. District Court for the Northern District of California, Nguyen v. OKCoin USA, 2023 WL 2095926 (2023), involved a web-based cryptocurrency exchange, which offered retail investors a marketplace to buy and sell cryptocurrencies. The plaintiffs were the customers of the defendants. To open their accounts, the plaintiffs were required to agree to defendant's terms of service (TOS).
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