The parties in the Austin Trout-WBO lawsuit filed briefs this week to determine the future of the legal dispute. After the First Circuit Court of Appeals sided with the boxer in invalidating a clause in the arbitration proceeding in the WBO contract with the fighter, the parties are now disputing whether arbitration should be thrown out altogether.
A further analysis of the appeals court argument is here. The appeals court found that the “Grievance Committee” put in place by the WBO in its arbitration clause was inappropriate and struck down.
The issue at hand before the trial court is whether the arbitrator-selection provision in the document is separable from the remainder of the arbitration provision for the WBO. The trial court must assess whether the WBO’s ‘severability’ clause would preserve its intent that the parties arbitrate any dispute regarding the contract. A ‘severability’ clause basically states that if any part of a contract is determined to be illegal, void or stricken for any reason, it can be severed from the contract while still preserving the original intent of the contract.
Plaintiffs argue that the invalidation of the arbitrator-selection provision renders the totality of the arbitration provisions of the WBO invalid and the case should go to trial before a jury.
According to the WBO, the main clause in the contract between Trout and the WBO was the choice of arbitrator. However, the WBO argues that the regulations of the organization contain a “savings clause” which states, “[i]f any of these Rules are determined to be unenforceable, the balance of these Rules shall remain in full force and effect.” Here, the WBO argues that despite its rules upon picking a trier of fact for the arbitration was struck down, the overall intent to arbitration should remain intact.
In its brief to the court the WBO argues that according to the “integral” test applied by the circuit court of appeals, arbitration selection provisions may be severed upon determination as to whether the arbitration selection provision is integral or central to the parties’ agreement to arbitrate and, if it is the invalidation of such a provision precludes the courts from compelling arbitration. The WBO claims that an arbitration may proceed with the selection of independent authorities to oversee the dispute.
Trout’s attorneys argue that if a portion of the arbitration process is stuck down, the complete provision should be rendered invalid.
As noted by Trout’s attorneys the arbitration provision are in two separate set of rules. The first is the WBO Appeal Regulations in which the arbitration regulations at issue is located and the second is the WBO Regulation of World Championship Contests. Trout points out that the appeal regulations does not contain a savings clause while the regulations of world championships does.
The trial court has granted the parties a chance to respond to each other’s briefs and submit them on December 1st.
Payout Perspective:
The overarching federal rule is to promote arbitration over going to trial however, the appeals court struck down the rules pertaining to the arbitration provision. The rules of the WBO contained a savings clause which specifies if any part of the contract is invalid, the rest shall remain. WBO argues that this is the case here. However, the arbitration provision struck down ty the appeals court was in the WBO Appeal Regulations document. Trout argues that since the appeals court found the process for arbitration invalid, the trial court should nullify the requirement. This is certainly a case which could go either way. If the trial court sides with the WBO, it would mean that it ruled in favor of the policy of arbitration despite the invalid rules for appointment of arbitrator and the fact that particular document did not have a savings clause. If it rules for plaintiff, it will overrule the arbitration provision and possibly the broader issue of interpreting a savings clause. MPO will continue to follow.
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