Arbitration agreement held enforceable despite impossibility of complying with governing-rules language

The Colorado Court of Appeals recently held that an arbitration agreement is enforceable even if complying with its governing-rules language is impossible. In the case, the parties entered into an arbitration agreement calling for any dispute to be governed by the rules of a particular arbitration company. One of those rules was that only that arbitration company could be the arbitrator applying its rules; in other words, one rule was that other arbitrators could not apply its rules. The problem was that the arbitration company did not do the kind of arbitrations that the parties intended. When a dispute later arose, they still did not. Therefore, it was impossible for the plaintiff to bring her case before that company, and, she contended and the trial court agreed, it would have been a violation of its rules — the rules agreed to by the parties — if a different arbitrator were to apply those rules. The Colorado Court of Appeals disagreed, holding that the parties had agreed to arbitrate, so arbitrate they must, though whoever they pick to be the arbitrator should still apply the other company’s rules for arbitration (despite the fact those rules prohibit other companies from apply those rules). The Court cautioned its conclusion might have been different if the parties had expressly stated that the prior company was their exclusive selection for an arbitrator.

Source: Johnson-Linzy v. Conifer Care Communities, 2020 COA 88 (6/4/2020).