The Arbitration Agreement - Part 1, Chapter 1 - AAA Yearbook on Arbitration and the Law - 23rd Edition
About the Editors:
Stephen K. Huber is Professor Emeritus at the University of Houston Law Center, and has served as a visiting professor at the University of Texas, Rice University (Political Science), Pepperdine Law School (Dispute Resolution Program), and the University of East Africa (Dar es Salaam, Tanzania). He has degrees in law from the University of Chicago and Yale University, and a B.A. from Earlham College.
Professor Huber's teaching and scholarly interest have centered on business and commerce (Contracts), and the regulation thereof (Administrative Law, Regulation of Financial Intermediaries). Over the last decade, his writings have focused on private binding dispute resolution proceedings (Arbitration). Teaching materials include: Stephen K. Huber & Maureen A. Weston, Arbitration: Cases and Materials (3d ed. LexisNexis 2011); Wendy Trachte-Huber & Stephen K. Huber, Mediation and Negotiation: Reaching Agreement in Law and Business (2d ed. LexisNexis 2007). Mr. Huber is a member of the State Bar of Texas, and the editor of Alternative Resolutions, the quarterly journal of the Dispute Resolution Section. He is the author of numerous publications relating to arbitration.
Ben H. Sheppard, Jr. is a Distinguished Lecturer and Director of the A.A. White Dispute Resolution Center at the University of Houston Law Center. From 1969 through 2005 he practiced at Vinson & Elkins L.L.P. where he was a partner and co-chair of the firm's international dispute resolution practice. His practice focused on litigation and arbitration, both as counsel and as arbitrator. He has served in international and domestic arbitrations as sole arbitrator, tribunal chair, party-appointed arbitrator and on tripartite tribunals selected from institutional rosters.
He was chair of AAA/ICDR task force that promulgated the 2006 amendment to the ICDR International Arbitration Rules that established a pre-arbitral emergency arbitrator procedure. He was the author of the report and recommendation to the ABA House of Delegates in support of the 2004 Revision to the AAA/ABA Code of Ethics for Arbitrators in Commercial Disputes. He chaired one of the two working groups that promulgated the CPR Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration. He is a past chair of the Disputes Division of the ABA Section of International Law and for five years served as editor-in-chief of The International Arbitration News. He is co-editor, with Lawrence W. Newman, and a contributing author to Take the Witness: Cross-Examination in International Arbitration (Juris 2010).
He graduated with high honors from the University of Texas School of Law in 1968, and was law clerk to the Honorable Homer Thornberry, United States Court of Appeals for the Fifth Circuit from 1968 to 1969.
Originally from: AAA Yearbook on Arbitration and the Law - 23rd Edition
1.01 Contract Formation
In re Morgan Stanley & Co., 293 S.W.3d 182 (Tex. 2009) The defense of mental incapacity is a gateway issue of contract formation that should be decided by the court, not the arbitrator. Decedent was diagnosed with dementia in 1999, after which she signed a power of attorney over to her granddaughter and appointed her as trustee. Decedent also transferred most of her securities accounts to Morgan Stanley. The granddaughter made gifts to herself, her mother, and her sister from decedent’s estate. Five years later, a Dallas probate court appointed a guardian of decedent’s estate who sued the granddaughter for civil theft and conversion, and Morgan Stanley for breach of fiduciary duty, breach of contract, and related claims. Morgan Stanley moved to compel arbitration. The guardian raised the defense that decedent lacked the mental capacity to contract with Morgan Stanley. The trial court and court of appeals refused to compel arbitration. The Texas Supreme Court affirmed.
The issue before the court was whether the defense of mental incapacity was an attack on the validity of the contract as a whole, which would be decided by the arbitrator under Prima Paint, or a gateway issue concerning the existence of the agreement that should be decided by the court. Relying on the U.S. Supreme Court’s opinion in Buckeye, the court decided mental incapacity fell into the latter category; “because the Supreme Court has grouped mental capacity with the other issues of contract formation, we do so as well.” The court criticized the Fifth Circuit’s conclusion to the contrary in Primerica and noted the numerous courts that refused to follow its reasoning. The court concluded that someone who lacks the mental capacity to form a contract necessarily also lacks the mental capacity to submit to arbitration within that contract, rendering Prima Paint severability inapplicable.
The Arbitration Agreement
1.01 Contract Formation
1.02 State Contract Law Defenses
1.03 Public Policy Defenses: Unconscionability
1.04 Defective (Unenforceable) Arbitration Agreements
1.05 Waiver of the Right to Arbitrate