United States Court of Appeals For the Seventh Circuit
Contracts — arbitration clauses
A clause naming an arbitrator in the event of a dispute is not integral to the contract, and thus, a substitute arbitrator can be used.
“Section 2 of the Arbitration Act could provide a better foundation for an ‘integral part’ escape hatch. Section 2 says that arbitration agreements are enforceable ‘save upon such grounds as exist at law or in equity for the revocation of any contract.’ This includes all general principles of state law, though not any arbitration-specific doctrines. See, e.g., Marmet Health Care Center, Inc. v. Brown, 132 S. Ct. 1201 (2012); AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). So if an error— such as the parties’ mutual, but mistaken, belief that the National Arbitration Forum was available—would permit revocation of the contract under ordinary state-law principles, the district court could declare the contract as a whole unenforceable. But neither side has asked for that relief or even contended that it would be possible under state law. The identity of the arbitrator is not so important that the whole contract is vitiated. Nor does either side contend that a mutual mistake of fact allows ¶17 to be excised as a matter of general contract law.”
Vacated and Remanded.
Appeal from the United States District Court for the Northern District of Illinois, Gottschall, J., Easterbrook, J.