ABRITRATION: Challenges to contract as whole vs. clause: CONSULTANTS & BUILDERS, INC. V. PADUCAH FEDERAL CREDIT UNION (COA 9/19/2008)

CONSULTANTS
      &  BUILDERS, INC. V. PADUCAH FEDERAL CREDIT UNION

      ABRITRATION:  Challenges to contract as whole vs. clause
      2007-CA-001874
PUBLISHED: REVERSING AND REMANDING
      PANEL: VANMETER PRESIDING; CAPERTON, GUIDUGLI CONCURS
      COUNTY: MCCRACKEN
      Date Rendered: 9/19/2008
      

In Consultants v. Paducah Federal Credit Union the Court of Appeals addresses the long standing question of arbitration challenges.  If a party claims they were fraudulently induced into the contract as a whole, doesn’t that mean the arbitration clause contained therein is not valid?  A resounding NO was the Court’s response.  The Court’s decision, based upon Federal case law, was that the decision of whether there was fraudulent inducement to the whole contract is a decision for the arbitrator.  However, if you claim you were fraudulently induced to enter into the arbitration clause, then it is a decision for the court.

Digested by Paul R. Schurman