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In
First Options of Chicago, 514 U.S. 938 (1995), the
Supreme Court stated that ordinary state contract law should
be used in deciding whether parties agreed to arbitrate certain
disputes, including arbitrability.
On December 8, 2004, in Dorian Fox
and the Investment Center, Inc v. Tanner et al, 2004 Wyo.
LEXIS 204, the Wyoming Supreme Court stated that it is for
the Courts to decide whether a case should go to Arbitration
under a contract that does not show clear intent to arbitrate
the issue of arbitrability.
The Supreme Court of Wyoming became the
first state high court to apply the U.S. Supreme Court’s
holding that questions about the arbitrability of a dispute
should be heard by a Court when there is ambiguity in the
contract about the proper forum for arbitrability to be decided.
The Wyoming Court also found that First
Options of Chicago required that waivers of access to
the courts in arbitration agreements were valid only from
clear and unmistakable consent to arbitrate, and not from
implied consent.
The Wyoming Court cited the Supreme Court’s
decision in Howsam v. Dean Witter Reynolds, 537 US 79 (2002).
There, the Court held that unless the parties indicate “clearly
and unmistakably” that questions of arbitrability be
submitted to an arbitrator, those issues go to the courts.
In Dorian Fox, a fraud and breach of contract action,
investment agreements contained mandatory arbitration clauses
that were silent on the issue of arbitrability. Because the
court could not find clear evidence of an agreement to arbitrate
the issue of arbitrability, it ruled that such a “gateway
dispute . . . should be properly determined by a court and
not an arbitrator.”
The court rejected the “separability
doctrine” of Prima Paint Corp v. Flood & Conklin
Manufacturing Co., 388 U.S. 395 (1967), which stated that
“under the [Federal Arbitration Act], a general attack
on a contract on the ground of fraud in the inducement is
a severable claim that is referable to arbitration; only a
claim of fraud in the inducement that is addressed to the
arbitration provision, itself, should be adjudicated by the
Court rather than by an arbitrator.” The Wyoming court
rejected this doctrine based on the modification of that doctrine
by First Options of Chicago.
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