Resolving a dispute by arbitration can have advantages and disadvantages. Among the advantages often associated with arbitration is the speed of dispute resolution. According to statistics provided by the American Arbitration Association, federal trial courts took an average of more than 12 months longer to get to trial than cases adjudicated by arbitration, and a total of nearly three years in court compared to nearly one year in arbitration for cases that went through the federal appeals process in court. One commonly noted disadvantage to arbitration is the lack of a formal or organized appeal process, in contrast to the traditional appellate process that exists in the court system.

Sometimes, whether a dispute is subject to a contract’s arbitration clause in the first place is itself is not entirely clear. In such a case, who decides whether the arbitration clause applies? Is it an arbitrator? Is it a judge? Recently, a Florida District Court of Appeal had occasion to consider this question in a lawsuit brought by vacation renters against the owner of a property they rented through Airbnb.

Doe v. Natt 

In Doe v. Natt, the plaintiffs alleged that the owner of their vacation rental secretly recorded their entire vacation stay. The plaintiffs sued the owner of the property and Airbnb, alleging several civil tort claims, including intrusion, constructive intrusion and loss of consortium. Airbnb filed a motion to compel arbitration, based on the arbitration clause contained in Airbnb’s online agreement.

The arbitration agreement at issue was contained in Airbnb’s online agreement, which was described by the court as a “clickwrap agreement.”  This popular type of agreement is one in which the contractual terms are agreed to online after the party agreeing to its terms clicks a box so indicates by clicking, “I agree.”

After a hearing on Airbnb’s motion to compel arbitration, the lower court determined that the decision of whether the dispute was subject to arbitration in the first place had to be made by an arbitrator, and not the court. The court reached this decision, in part, because it agreed with Airbnb that the clickwrap agreement’s incorporation by reference of an American Arbitration Association (AAA) rule that gave authority to the arbitrator to decide whether a matter was subject to arbitration took precedence over the court’s authority to do so.

The Florida District Court of Appeals, Second District, reversed. The appellate court found that the clickwrap agreement and the AAA rules it incorporated by reference did not provide the necessary clear and unmistakable evidence of the parties’ intent to have an arbitrator decide if a dispute was subject to arbitration in the first place.

If you have questions about arbitration clauses in rental contracts, or other contracts, contact the Fort Lauderdale business lawyers at Sweeney Law.

Resources:

scholar.google.com/scholar_case?case=8003950980505024935&q=condominium+rental&hl=en&as_sdt=4,10&as_ylo=2020#[2]

go.adr.org/impactsofdelay.html?utm_source=website&utm_medium=click&utm_campaign=impacts_of_delay&_ga=2.10222320.433317632.1590691760-1151440627.1590691760

https://www.sweeneylawpa.com/the-hotel-industry-national-and-statewide-effects-of-the-pandemic/

Arbitration is progressively being adopted and accepted in the construction industry as the standard for settling disputes due to views regarding the benefits of arbitration over litigation.

Chapter 682 of the Florida Statutes directs the state’s Arbitration Code, and it grants authority to voluntary binding arbitration. On the whole, this means that if two or more parties in a dispute agreed to arbitrate any disputes in their contract, otherwise known as an Arbitration Agreement, then the courts will likely enforce mandatory arbitration if and when a dispute arises.

Arbitration has benefits and detriments much like any other form of dispute resolution. The most popular advantages of arbitration are speed and simplified procedures. Additionally, most proponents of arbitration agree that the ability to select your arbitrator aids in the fairness of the proceeding and since arbitration hearings do not take place in open court and are not part of the public record there is a higher degree of confidentiality.

The disadvantages to arbitration is that it is generally more expensive than litigation, the finality of the decision, the looser rules regarding evidence, and the inability to issue subpoenas.

Regarding the finality of the decision, it can be difficult to overturn an arbitrator’s decision. Generally, an arbitrator’s decision will only be overturned based on corruption or fraud. A legal error made by the arbitrator or counsel will not qualify you for an appeal when it comes to arbitration, as it would in litigation. Although arbitration by statute, specifically Florida Statute 44.104, does provide that an arbitration award can be appealed to state circuit court but no further.

The right or mandate to arbitrate dispute can be included in contracts or agreement and also can be waived. Cases decided under the Florida Arbitration Code state that acts inconsistent with an intent to arbitrate may indeed constitute a waiver of arbitration. Florida courts have also held that the party claiming the right has been waived needs to also demonstrate that they would be prejudiced by having to proceed with arbitration. In Santander Consumer USA Inc. v. Muszynski, 2014 WL 2765218 (Fla.Cir.Ct.), a case handled by Brendan A. Sweeney, Esq., LL.M., wherein he successfully represented subprime automobile lender in an appeal of the trial court’s non-final order which denied Santander Consumer USA, Inc.’s motion to compel arbitration and dismiss the action.

Additionally, arbitration can be used as a tool to eliminate class action lawsuits. Many agreements include provisions that provide that arbitration is the only dispute resolution available to the agreements parties. However, courts have held that class actin prohibitions can be voided if they are unconscionable. For instance, in Powertel, Inc. v. Bexley, 743 So. 2d 570 (Bankr. Fla. App. 1999) a Florida appellate court stated:

The arbitration clause also effectively removes Powertel’s exposure to any remedy that could be pursued on behalf of a class of consumers…. Class litigation provides the most economically feasible remedy for the kind of claim that has been asserted here…. By requiring arbitration of all claims, Powertel has precluded the possibility that a group of its customers might join together to seek relief that would be impractical for any of them to obtain alone.

Overall, arbitration has many pros and cons and overall has its own complex system of resolving disputes, but it is a commonly used mechanism and arbitration agreements can be widely found on contracts of all sorts.

Sweeney Law, P.A. Has Vast Experience in Handling Arbitration Matters

Brendan A. Sweeney, Esq., LL.M., of Sweeney Law, P.A., a boutique firm in Fort Lauderdale, Florida, regularly handles complex arbitration matters throughout Florida. Brendan A. Sweeney, Esq., LL.M. is an AV Preeminent Martindale Rated Attorney, that has been recognized as a Florida Super Lawyer in 2019, Florida Legal Elite in 2019, and as a Florida Super Lawyer Rising Star in 2018, 2017, 2016, 2015, and 2014. If you have any questions and/or issues regarding arbitration matters contact Sweeney Law, P.A. at (954) 440-3993 immediately to protect your rights.

www.sweeneylawpa.com.