In Tennessee, arbitration is a four-letter word. Why? Because in a lawsuit, you have the right to appeal a bad decision to the court of appeals. Even the best judge has a bad day. But, arbitration provisions are a fact of life and are a regular part of any form contract. Some contracts specify the Federal Arbitration Act, and some specify the Tennessee Uniform Arbitration Act. Does it really matter?
Well, Duh. They are different and which act governs can have major consequences. One important difference is the “well he lied to me before I signed the contract” defense. This defense is better known as fraud in the inducement. Under the Tennessee Uniform Arbitration Act, this issue must be decided by a judge and jury. Under the federal act, no such luck.
Also, do not ever assume that if you specify that Tennessee law applies, that this includes the Tennessee Uniform Arbitration Act. Why, because Tennessee law may mandate application of the Federal Arbitration Act unless the Tennessee Uniform Arbitration Act is specified.
The Moral of This Story – if you must arbitrate, Tennessee is probably better than USA.
Elliott v. Icon in the Gulch, LLC, No. M2009-01554-COA-R3-CV (Tenn. Ct. App. May 19, 2010)
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