In binding arbitration clauses, exceptions to the duty to arbitrate for injunctive relief claims are common, especially in confidentiality and technology license agreements. The intention is to ensure that the parties are free to pursue claims for emergency relief notwithstanding that all other claims must be resolved via arbitration.
All too many arbitration clauses, however, fail to articulate the injunctive relief bypass in a way that would allow the parties to actually bypass arbitration and proceed directly to court, given that rules of arbitration universally vest the arbitrator with the power to determine the scope of arbitrability.
The lesson of a recent US Supreme Court case, Henry Schein Inc. v. Archer White Sales, Inc. (US S. Ct. 2018), is that if the intention is to preserve the ability to go directly to court to pursue injunctive relief, without the need to first secure a non-arbitrability ruling from the arbitrator, the parties must make that intention clear.
Here’s recent work product from Redline illustrating how the typical clause could be modified to accomplish this objective:
Notwithstanding the [arbitration clause], either party may at any time bypass arbitration and pursue claims far injunctive relief in any court of competent jurisdiction. The arbitrator is not vested with authority to determine either party’s rights under this section, and either party’s right to pursue such relief is not arbitrable.
For more work product and collaboration on this issue, go here.
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