The case of A-1 Premium Acceptance, Inc. v. Hunter, No. SC96672 (Sup. Ct. Mo. Oct. 16, 2018) is a reminder to be careful who and how you name an arbitrator in your contracts. In this case, A-1 Premium Acceptance, Inc., also known as "King of Kash", had loaned money to consumer Meeka Hunter ("Consumer"). [Link to Decision] After default on the loans, King of Kash filed suit against Consumer. When Consumer asserted a counterclaim for violation of the Missouri Merchandising Act, King of Kash sought to compel arbitration under the terms of the loan contracts.
The loan contracts stated that all claims "shall be resolved by binding arbitration by the National Arbitration Forum, under the Code of Procedure then in effect." That provision may seem clear enough, except that King of Kash had previously entered into a consent decree in which it had agreed to cease arbitration services for all consumer claims nationwide. This meant that National Arbitration Forum ("NAF") could not arbitrate the case. Therefore, in the absence of NAF, who would arbitrate the case? Could the Court order another arbitrator?
The Missouri Supreme Court concluded that it could not compel arbitration because the language of this contract made it clear that the parties had agreed that NAF and only NAF would arbitrate disputes. Since NAF could not arbitrate the matter, arbitration could not be compelled because the contract did not make it clear that the parties had agreed to arbitrate if NAF was unavailable.
The lesson of this case is simple: If you name a particular party in your contract as the arbitrator for disputes, make sure you also specify who will serve as arbitrator in the event the first choice is unavailable and how that arbitrator is selected. Otherwise, you may lose the ability to arbitrate disputes.