Plaintiff electronically signed a contract which contained: (1) terms governing the loan; (2) an agreement to submit disputes to arbitration; and (3) a choice of law provision which required the application of Otoe-Missouria tribal law and disclaimed the application of state or federal law. The arbitration clause itself provided that “any dispute … will be resolved by arbitration in accordance with the law of the Otoe-Missouria Tribe of Indians.” The same disclosure about the application of Otoe-Missouria tribal law was included on the signature page.
Relying on the Circuit Court’s prior decision in Hayes v. Delbert Services Corp., 811 F.3d 666 (4th Cir. 2016), the district court concluded the contract denied the applicability of all federal and state law, holding the arbitration agreement unenforceable.
The Circuit Court reviewed, tasked with examining whether, as a matter of law, the “choice-of-forum and choice-of-law clause operate in tandem as a prospective waiver of a party’s right to pursue statutory remedies.” As the language took the “plainly forbidden” step of prospectively waiving federal substantive rights, the choice of law provision was unenforceable as a matter of law and not severable from the rest of the arbitration agreement, because the choice of law provision went to the “essence” of the contract.