Parsing the Sometimes Fine Distinction Between a Broad and a Narrow Arbitration Clause

In an employment dispute, the District Court of Connecticut dissected an arbitration clause to determine whether its scope was “broad,” resulting in a presumption of arbitrability of collateral issues, or “narrow,” in which case collateral issues would generally not be subject to arbitration.  The court ultimately found the clause at issue to be “broad,” but the question was close, as demonstrated by the court’s recognition that “reasonably similar” clauses had been deemed “narrow” by other courts within the Second Circuit.

The clause at issue provided for arbitration of “any controversy or claim arising under federal, state and local statutory or common or contract law … involving the construction or application of any of the terms, provisions or conditions of the Agreement….” The fact that the agreement provided for arbitration of controversies “arising under” essentially any law, as opposed to controversies “arising under” solely the agreement itself, weighed in favor of characterizing the agreement as broad.

The next phrase in the arbitration agreement (“and involving the construction or application of any of the terms, provision, or conditions of the agreement”), “somewhat” limited the disputes subject to arbitration, but the court found it to be very similar to “a classically broad arbitration clause.” The court analogized the clause to another that addressed “claims arising out of or relating to” the construction or application of terms, as opposed to this clause, which pertained to claims “arising under law and involving” the construction or application of terms. Since the arbitration clause at issue was broad, the court applied a presumption in favor of arbitration. The plaintiff failed to rebut this presumption, and therefore the court referred the parties to arbitration.

Tahirou v. New Horizon Enterprises, LLC, Case No. 3:20-cv-00281 (USDC D. Conn. Oct. 29, 2020).