Jottings By An Employer's Lawyer

Friday, May 29, 2009

Texas Legislature Takes Care of an Irritant in Texas Arbitration Law

When the law of arbitration in Texas was relatively unsettled, it was common for state district judges to deny motions to compel. To ensure that you were protected on appeal, an employer had to both file an interlocutory appeal AND file a mandamus action under the Federal Arbitration Act.

The reason, if the Texas Arbitration Act were applicable then the proper route to the appellate court was appeal; however, there was no comparable provision for the appeal of an action governed by the Federal Arbitration Act, mandamus was the only route. Since it was often unclear which act would control, the safe course was to appeal and file mandamus.

A few applicants were felled by this oddity, but for the most part, the parties and courts just put up with duplicative filings which caused more work and expense.

With yesterday's passage of SB 1650 by both houses of the Texas legislature, that irritant has been removed. If arbitration is denied a party will be entitled to an interlocutory appeal even if the FAA controls. The bill still has to be signed by the Governor but I can't imagine that there is any reason it will not be signed. The effective date is September 1, 2009.

Although it is certainly a nice fix, now that the law on enforcement of arbitration actions is fairly well settled -- bottom line, the motion to compel should be granted in all but the most unusual circumstances -- it may get very little use.

Still if for no reason other than it just didn't make sense, it is nice to see it cleaned up.


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