This article was also published by the American Bar Association’s Section of Litigation, Alternative Dispute Resolution Committee.
It is increasingly common to find arbitration clauses that require the parties to first mediate a claim before proceeding to arbitration. Furthermore, courts have not hesitated to enforce such clauses by ordering parties to mediate before arbitrating. E.g., Clarke’s Allied, Inc. v. Rail Source Fuel, LLC, 2012 WL 6161565 (E.D.Tex. 2012). Such clauses raise the question, however, of whether the court or arbitrator has the authority to decide if a pre-arbitration mediation requirement has been satisfied. In Knowles v. Community Loans of America, Inc., 2012 WL 5868622 (S.D.Ala. 2012), the plaintiff’s employment contract provided that the parties first had to make a “good-faith effort” to resolve any disputes “internally on an informal basis.” If that failed, the dispute had to be submitted to mediation, and if that failed, to binding arbitration. When a dispute arose over whether those pre-arbitration requirements had been complied with, the court first found that they constituted a “condition precedent to arbitration.” The court then ruled that, absent an agreement to the contrary, the arbitrator should decide whether a condition precedent to arbitration has been met. Because there was no agreement to the contrary, the court concluded that the arbitrator should decide whether the pre-arbitration informal resolution and mediation requirements had been satisfied.