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You are here: Home / Arbitration / Court Decisions / Arbitration Process Issues / STATE LAW REQUIRING “JURISDICTION OF ACTION” IN COURTS FOR INSURANCE DISPUTES RENDERED ARBITRATION CLAUSE VOID

STATE LAW REQUIRING “JURISDICTION OF ACTION” IN COURTS FOR INSURANCE DISPUTES RENDERED ARBITRATION CLAUSE VOID

January 28, 2013 by Carlton Fields

The Washington Supreme Court affirmed the denial of a motion to compel arbitration in an insurance dispute, based on a state statute that prohibits insurance contracts from “depriving the courts of [Washington] of the jurisdiction of action against the insurer.” The court analyzed the legislative history of the statute and state court precedent to find that the statute is more than a forum selection provision, but is a requirement for insurance disputes to be litigated in court. The court rejected the argument that a court’s ability to confirm an arbitration award constitutes “jurisdiction of action,” holding that a court’s power to confirm an award reflects only “limited” jurisdiction. The court further held that the state law regulated the “business of insurance” under the McCarran-Ferguson Act, so as to reverse preempt the FAA and preclude any application of Concepcion to this case. This result is similar to that in states which have a statute prohibiting arbitration provisions in certain insurance contracts. Washington Department of Transportation v. James River Insurance Co., Case No. 87644-4 (Wash. Jan. 17, 2013).

This post written by Michael Wolgin.

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Filed Under: Arbitration Process Issues, Contract Interpretation, Jurisdiction Issues, Week's Best Posts

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