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rvlaw
rvlaw, Attorney
Category: Business Law
Satisfied Customers: 8386
Experience:  NYC Trial Attorney 30+ years; Law professor ; BUSINESS LAW; CONTRACTS; TORTS; Arbitrator
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Arbitration clause has to say "the arbitration to be held in

Resolved Question:

Arbitration clause has to say "the arbitration to be held in Kentucy" in order to have the clause enforceable? This is according to the ruling of supreme court in KY (see link below).
If this is the case, can the party involved in dispute go to court as long as the arbitration clause fails to indicate the location/state of arbitration?


http://www.dbllaw.com/2010/12/arbitrate-in-kentucky-must-say-so/
Submitted: 2 years ago.
Category: Business Law
Expert:  rvlaw replied 2 years ago.

Hi and welcome,

A party can commence the dispute in court if the arbitration clause does not specify that the arbitration must be held in KY.

In Kentucky, the arbitration clause must provide that the arbitration proceedings “shall be held in Kentucky.” Otherwise, a Kentucky court will not have jurisdiction to compel arbitration or enforce the arbitration award. Ally Cat, LLC v. Chauvin, 274 S.W.3d 451 (Ky. 2009). You cannot “agree” that Kentucky has subject matter jurisdiction over the arbitration. You have to follow the Kentucky Arbitration Act, which provides that the arbitration must be held in the Commonwealth. Similarly, you cannot manufacture federal subject matter jurisdiction by agreeing so in the arbitration clause.

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rich

Customer: replied 2 years ago.

Rich,


I like the answer. It seems you know KY arbitration well. I have been bothered by the arbitration clause. I was trying to argue to go around arbitration because the other party committed fraud (in billing government healthcare). To be sure about this, I copied the original wording in the Agreement of my contract below. Also a sentence under Schedule of Conditions. Could you further clarify that for me. I really appreciate that. Furthermore, are you interested in answer questions related to the dispute of this matter?


 


In the main Purchase Agreement (item 8)


 


“In the event of any dispute, subsequent to the closing of this sale, between BUYER and SELLER under this Agreement, the parties agree to submit the matter to arbitration in accordance with the rule of the American Arbitration Association. Each party shall choose a single arbitrator and the two so chosen shall choose a third arbitrator. Either party may be represented by counsel. The decision of the arbitrators shall be final and conclusive and the right of appeal is hereby waved. BUYER shall not have the right to any Promissory Note(s) or balances owed hereunder”


 


In the Schedule of Condition of Purchase Agreement:


CHOICE OF LAW: This contract shall be governed by and construed under the laws of the State of Kentucky, in the County of Jefferson.


 


Given the only two statements that may be related to arbitration, can we conclude that this arbitration clause cannot be enforced by court in KY because the clause fails to specified “arbitration to be held in KY”. Will the court more likely to throw out the arbitration clause and accept the case instead? Does the CHOICE OF LAW (in Schedule of Condition) imply the arbitration to be held in the Commonwealth of KY? Or it is just the opposite: The law requires clear statement in arbitration clause “to be held in KY”.

Expert:  rvlaw replied 2 years ago.

The agreement must say "arbitration must be held in KY" if it doesn't it's as if there is no arbitration clause and either party can go right to court and start suit

rich

rvlaw, Attorney
Category: Business Law
Satisfied Customers: 8386
Experience: NYC Trial Attorney 30+ years; Law professor ; BUSINESS LAW; CONTRACTS; TORTS; Arbitrator
rvlaw and 6 other Business Law Specialists are ready to help you

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