Recently the Florida statutes changed to allow for arbitration clauses in Florida Revocable Trust Agreements. When including an arbitration clause in a Florida Revocable Trust one needs to make sure the arbitration clause will be enforceable.
Below are some issues with arbitration clauses in Florida that need to be considered whether used for Florida Business Contracts, Transactions in Florida, or Florida revocable trusts. Luckily the US Supreme Court has ruled that if an arbitration clause is invalid, the clause can be removed from the agreement and the underlying agreement can still be valid.
Florida Arbitration Clauses
An agreement to arbitrate, or a provision in a contract providing for the arbitration of disputes, is valid, enforceable, and irrevocable without regard to the justiciable character of the controversy. The only questions for a court to determine when looking to see whether an arbitration clause is enforceable are:
1. Whether the agreement that contains the arbitration clause is valid?
2. Whether the parties have a valid arbitration agreement;
3. Whether an arbitrable issue exists; and
4. Whether the right to arbitrate has been waived.
In addition, many arbitration clauses in Florida have been held unenforceable because they take a way a statutory right from an individual.
Other Florida cases have held that arbitration clauses do not apply unless it was reasonable to assume that at the time of execution, the clause was meant to apply to the circumstances involved in the case. In such a situation, an arbitration clause within a financing agreement, was not enforceable against a wrongful death action.
When determining if there is a valid arbitration agreement, courts will often look at the time at which the agreement was signed, as well as if the person executing the agreement had the authority and understanding to execute the agreement. Often in nursing home cases, the arbitration clause is signed by a health care surrogate or after the patient has been admitted to the nursing home. Florida courts have held that a health care surrogate does not have the authority to bind the individual with an arbitration clause. In addition, the person entering a nursing home often does not have the mental capability to understand what they are signing. If they are unable to understand the agreement, there is no meeting of the minds, and the agreement can be held to be unenforceable. Likewise, if the Florida arbitration clause was signed after the patient was admitted the court will find that there is no consideration for the arbitration and the agreement is not valid without consideration.
Public policy in Florida favors arbitration as an alternative to litigation because claims can be expedited, expenses can be reduced, and with a valid agreement the parties choose their own substitute method of resolving disputes. The Florida Supreme Court has stated that despite arbitration provisions being generally favored by the courts, the right to arbitration must be safeguarded by a party who seeks to rely upon that right and the party must not act inconsistently with the right.
A party can waive their right to arbitration by acting inconsistently with the right to arbitration right, voluntarily and intentionally relinquishing their right to arbitrate, or engages in conduct which implies that they voluntary and intentionally relinquished their right to arbitrate.
Once an arbitration clause is determined to be valid, a Court may not intervene in the arbitration process. This is necessary to preserve the integrity of the arbitration process as a means of alternate dispute resolution.