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Thursday, October 17, 2013

HM DG, Inc. v. Amini: Court Enforces Arbitration Clause That Does Not Specify How Arbitrator Will Be Selected

In HM DG, Inc. v. Amini (9/20/13) --- Cal.App.4th ---, the trial court denied a petition to compel arbitration because the arbitration clause at issue "is uncertain in that it does not specify before what agency o[r] person the matter will be arbitrated, [or] how the arbitrator will be selected, but merely sets for[th] alternative options for these terms." 

The Court of Appeal reversed. 
Code of Civil Procedure section 1281.61 specifically contemplates the existence of an enforceable arbitration agreement even where the "arbitration agreement does not provide a method for appointing an arbitrator . . . ." The statute further provides that "[i]n the absence of an agreed method, or if the agreed method fails . . . , the court, on petition of a party to the arbitration agreement, shall appoint the arbitrator." (Ibid.) As we shall explain, because the court has the power to appoint an arbitrator under section 1281.6 when the parties fail to agree upon a method for appointment, we conclude that neither the absence of a definite method, nor the presence of "alternative options," for appointing an arbitrator renders an otherwise valid arbitration agreement unenforceable. 
Slip op. at 2. The Court remanded for the trial court to determine whether other grounds exist to deny the petition under section 1281.2. 

The opinion is available here

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