Arbitration

A trustee who sought "turnover" of amounts owed under a construction contract had an arbitration clause in that contract enforced against him. The Bankruptcy Court found that the bankruptcy exception to enforcement of an arbitration clause was narrow and did not apply to a construction dispute. Satija v.  Kella (In re Davila General Contractors, LLC), Adv. No. 21-1047 (Bankr. W.D. Tex. 3/9/22). The order can be found on CM/ECF at Docket #23.

What Happened

Bankruptcy and arbitration are both intended to provide a quick and relatively efficient resolution to disputes between a debtor and his creditors. Both allow adjudication without a jury. Both systems should be able to move more swiftly than a court of general jurisdiction because there are no competing priorities, such as in criminal cases subject to the requirement of a speedy trial.

Wells Fargo and JPMorgan Chase recently avoided shareholder votes tied to their use of arbitration clauses in sexual harassment cases. But socially conscious investors say the issue is likely to flare up again elsewhere and that banks would do well to address a wide range of gender equity matters head on.