Legal Question in Business Law in California

If a business in Hawaii that is legally a Nevada-based corporation wants to force an arbitration with a past employee/board member in California, who has jurisdiction? For instance: There is a supposed contract (signed by only one person) that agrees they will do arbitration in Hawaii. Can the Hawaii business force the California ex-employee/board member come to Hawaii to arbitrate?

Asked on 9/03/13, 12:09 pm

4 Answers from Attorneys

Edward Hoffman Law Offices of Edward A. Hoffman

Probably. But I would need to see the contract and learn more facts (e.g., who signed the contract, whether the other side had performed according to its terms, whether both sides were aware of the terms before the dispute arose, what the dispute is about, etc.) before I could say one way or the other.

You ask who has jurisdiction over this dispute, but that is the wrong question. Originally, both California's and Hawaii's courts may have had jurisdiction. But parties can contract away their rights to bring cases in a particular state, as long as jurisdiction is proper in another state. Or they can contract away their rights to go to court at all and require arbitration instead, at least as to most types of claim. That seems to be what happened here. Whether it was done correctly will depend on the factors I listed earlier, among others. But in principle, this type of agreement can be enforced.

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Answered on 9/03/13, 12:59 pm

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

A threshold question in answering this question is "What state's law will apply?" I'm inclined to think it would be Hawaii law, since that's where the company operates and where at least one contract was written up that provides for arbitration in Hawaii. Because interpretation of the contract would probably depend upon Hawaii law, it may be advisable to re-ask this question under Hawaii.

If California law applied, which it probably doesn't, the Code of Civil Procedure, section 1282.2(a)(1) allows the neutral arbitrator to determine the time and place of the arbitration.

As to the validity and enforceability of the contract signed by just one party, I'd need further information. We have unilateral contracts, where acceptance of an offer by performing a requested act seals the bargain. For example, if X gives Y a signed piece of paper on which he has written "If you paint my house by next Tuesday, I'll pay you $1,000." and Y begins to paint, the parties are in contract. So, the party who didn't sign may have accepted the terms and formed a contract. Or, maybe Hawaii enforces oral agreements to arbitrate.

In any event, if the party who doesn't want to go to Hawaii to arbitrate fails to show up, or convinces the other party not to arbitrate, there'll probably be a lawsuit instead.....probably meaning a lot more expense and a lot more time away from home. Although there are a lot of additional facts needed, I think I'd be inclined to advise the party to appear and participate in the arbitration. That could be a lot cheaper that the alternatives.

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Answered on 9/03/13, 1:16 pm
Timothy McCormick Libris Solutions - Dispute Resolution Services

You have received a lot of very long winded answers without much clarity. As the others pointed out, who signed the contract is key. If the California party signed it, that is the end of discussion. They are bound to arbitrate in HI, and a proceeding to compel arbitration in HI can be filed against him or her in California. If the California party never signed the contract, then you do, actually, have to go into Mr. Whipple's analysis as to whether a binding contract to arbitrate was formed. I disagree that HI law would automatically control in that case, however, unless that is where the contract was formed. Interpretation of a contract is based on the law of where it was formed unless the contract says otherwise. Bottom line, however, is that there is no obligation to arbitrate anywhere in the absence of a contract to arbitrate. If the contract to arbitrate was formed, either by the California party signing it, or otherwise, then the arbitration would be in HI. Mr. Whipple is completely wrong that the arbitrator could choose the location, because that code section only applies if the arbitration agreement does not specify where it will be held. So either there is no binding arbitration agreement or it is binding to have arbitration in HI.

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Answered on 9/04/13, 10:39 am
Keith E. Cooper Keith E. Cooper, Esq.

The short answer is 'yes.' If the contract says arbitration takes place in Hawaii and the parties executed the contract, they have agreed to go to Hawaii to arbitrate. In legal terms, a contract may be executed either by signing it or performing it. You say one party signed, but you don't say which party. The party who signed is definitely obligated. Any party who did not sign but has performed under the contract and received the benefits of the contract (i.e. has acted as if they contract were valid), has impliedly signed the contract.

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Answered on 9/09/13, 4:11 pm

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