Wright v. GGNSC Holdings LLC

Summary

The South Dakota Supreme Court held that Federal Arbitration Act § 5 required appointment of a substitute arbitrator after the National Arbitration Forum became unavailable to administer its Code of Procedure. The court concluded that the NAF Code was an ancillary logistical component rather than an integral part of the parties’ arbitration agreement, and it reversed and remanded for appointment of a substitute arbitrator. The decision did not preclude consideration on remand of the plaintiffs’ other defenses to arbitration.

Holdings

1. Section 5 of the Federal Arbitration Act applies when the designated arbitral forum becomes unavailable and requires the court, upon a party's request, to appoint a substitute arbitrator unless the designated forum was as important to the agreement as the agreement to arbitrate itself.
2. Designation of the National Arbitration Forum Code of Procedure was an ancillary logistical concern and did not make the agreement incapable of enforcement through a substitute arbitrator.
3. The NAF Code penalty provision did not bar arbitration by a substitute arbitrator after the NAF became unexpectedly unavailable.

Questions Presented

1. Whether Section 5 of the Federal Arbitration Act required appointment of a substitute arbitrator after the National Arbitration Forum became unavailable.
2. Whether designation of the National Arbitration Forum Code of Procedure was an integral, rather than ancillary, part of the parties' arbitration agreement.
3. Whether the agreement's penalty provision for resorting to a lawsuit or other action prevented arbitration by a substitute arbitrator.

Disposition

reversed_and_remanded