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June 1, 2016Andrea De La Rosa

A Court’s Authority to Determine Arbitrability by Looking at the Relevance of an Underlying Contract to a Claim

Douglas v. Regions Bank, 757 F.3d 460 (5th Cir. 2014)

How To Interpret a Complex Business Contract

The purpose of this paper is to suggest a methodology for interpreting a complex business contract (or any contract, for that matter) by interpreting it as a whole, rather than solely by seizing upon certain language within the contract. This paper assumes that the reader has from law school and legal practice become familiar with basic principles of contract formation, drafting and interpretation. An easy-to-read and excellent resource book on these topics is Charles M. Fox, WORKING WITH CONTRACTS: WHAT LAW SCHOOL DOESN’T TEACH YOU (Practicing Law Institute (2nd ed. 2008), available inexpensively at Amazon.com and from numerous other sources. The author illustrates the process by reference to a hypothetical, complex business transaction in which an existing contract places many restrictions on the ability of a party to that contract to do other transactions (directly or through its subsidiaries), including the hypothetical transaction. The task is to identify the salient contractual provisions in the existing, restrictive contract, interpret it as a whole, and reach conclusions regarding the intent of the parties to the restrictive contract. The purpose of the task is to determine whether or not a proposed new transaction would be permitted.

Pros and Cons of Arbitration

The continuing decline in the number of jury trials, coupled with the public policy in favor of arbitration, may suggest that arbitration is the fastest and most cost efficient forum for dispute resolution. For the right case with the right parties, arbitration can be an efficient forum to resolve a dispute. But while that might be true in some cases, it is not true for all cases. Jury trials still offer many advantages over arbitration, and the 7th Amendment still needs to be preserved. When deciding on a dispute resolution forum, the practitioner should advise the client of the pros and cons of each process, so that the client can make an informed decision—and not just a knee jerk reaction.