Search Site
Menu
Arbitration: Hoskins’ Choice

49457224-arbitration

Courts have historically been protective of arbitration awards and reluctant to overturn them.  However, the level of deference to arbitration awards was significantly increased by the Texas Supreme Court’s recent decision in Hoskins v. Hoskins.[1]  In Hoskins the Court expressly overruled two common law basis for challenging arbitration rulings[2], and found that an arbitrator’s ruling could not be overturned even if it manifestly disregarded the law in Texas, unless the arbitration provision expressly limited the arbitrator’s authority to applying Texas law.[3]  Accordingly, businesses should carefully consider their goals before including an arbitration provision in their commercial contracts and draft specific language to reach those goals when arbitration is the correct option.

Arbitration is often touted as a more efficient and cost effective means of solving legal disputes.  Accordingly, many commercial contracts have a general provision calling for all disputes arising under the contract to be resolved by arbitration.  The goal of adding this provision is to ensure that no dispute is subject to all of the costs and delay associated with litigating in the court system.  Viewed in this light one might think that all contracts should contain an arbitration provision.  Who doesn’t want faster, cheaper resolution of disputes so that we can focus on running our business?

However, the decision in Hoskins means that unless the arbitration provision expressly includes limitations on the arbitrator’s authority to decide a dispute, the arbitrator can resolve the dispute in any manner s/he deems appropriate.  For example, an arbitrator could issue an award for a “claim” that is not recognized under Texas law.  Accordingly, an arbitration provision may introduce uncertainty in the contract and open the business up to liabilities and risks there were never even considered as a possibility when negotiating the contract.

Accordingly, while arbitration provisions still serve a valid strategic purpose, they should not be considered a proper provision for every contract.  Rather, businesses should carefully consider their goals before including an arbitration provision and consult with qualified counsel to ensure that proper language is used to outline the arbitrator’s authority.

Royce S. Lanning

Phone: 281-367-1222

Fax: 281-210-1361

[email protected]

 

[1] 2016 Tex. LEXIS 386; 59 Tex. Sup. J. 895; 2016 WL 2993929

[2] The first being gross mistake of the law (a mistake so significant as to imply bad faith or a lack of honest judgment) and the second being manifest disregard of the law (when the arbitrator recognized the law but chose to ignore or apply it incorrectly).

[3] Id. at *11-12

Leave a Reply

Your email address will not be published. Required fields are marked *

Contact a Dedicated Texas Business Lawyer To Schedule a Consultation
Call 281-367-1222 or contact us online to schedule a meeting.

Strong In Action

  • Spring 2019

    The Strong Firm represents borrower in $42.3 million HUD construction loan for multifamily real estate development in Walton County, Florida.

    Read More
  • Spring 2019

    The Strong Firm acts as legal counsel for borrower in $32.1 million HUD construction loan for multifamily real estate development in Conroe, Texas.

    Read More
  • Spring 2019

    The Strong Firm aids borrower in $31.7 million HUD construction loan for multifamily real estate development in Nueces County, Texas.

    Read More
  • Spring 2019

    The Strong Firm represents borrower in the refinancing of a $3.57 million commercial mortgage-backed security for a commercial office facility in Montgomery County, Texas.

    Read More
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  • Peer Rated 2019 Award

Recent Blog Posts

Legislation Authorizes Paid Sick Leave for Workers Suffering from Coronavirus

New legislation passed in response to the COVID-19 pandemic allows certain workers to receive paid sick leave even if their employer previously did not provide it. In March, the federal government enacted the Families First Coronavirus Response Act (FFCRA). This law assists employers that give their employees paid time off
Read More
Legislation Authorizes Paid Sick Leave for Workers Suffering from Coronavirus

Lenders Suspend Home Foreclosures Due to COVID-19, But What Happens Next?

Many large financial institutions are suspending foreclosures because of the massive economic damage caused by COVID-19. Some banks have stopped proceedings indefinitely. Others have set time limits for foreclosure suspensions such as 60 or 90 days. Even as health and financial issues remain uncertain, this is a good time for
Read More
Lenders Suspend Home Foreclosures Due to COVID-19, But What Happens Next?

How Can I Create Estate Planning Documents During the Pandemic?

Even in its first few weeks, the COVID-19 pandemic caused many people to examine or reassess what is most important to them. The need to prepare in case of an emergency or untimely death has been highlighted by the tragic losses occurring around the country. What can you do if
Read More
How Can I Create Estate Planning Documents During the Pandemic?

Complying with Corporate Annual Meeting Requirements during the COVID-19 Quarantine

How do you hold a corporate annual meeting when the entire country is in lockdown? On the surface, it might seem like a simple matter of using a favorite video conferencing tool and perhaps checking to see if it’s been hacked. Annual meetings for corporations are more than get-togethers. They
Read More
Complying with Corporate Annual Meeting Requirements during the COVID-19 Quarantine
  • Video Vault


    Watch videos done by our legal team to gain a better understanding of your legal needs. Our lawyers give video insight into areas such as Real Estate, Business Law, Mergers & Acquisitions and much more.

Pay Retainer Online

Use our easy-to-use and secure online payment feature.
We accept all major credit cards.

Pay Your Retainer

Contact us

Quick Contact Form