BILL ANALYSIS

C.S.S.B. 1216

By: Estes

Judiciary & Civil Jurisprudence

Committee Report (Substituted)

BACKGROUND AND PURPOSE

In many cases, a person involved in a dispute has the right to settle the dispute in court.  However, if both parties agree to do so, the dispute may be settled through arbitration, in which case both parties agree to a contract in which they surrender their right to appear in court.  In order for such a contract to be enforceable, the parties must have reached the agreement voluntarily and in the absence of fraud. 

In most cases, if evidence can be produced demonstrating that a party signed an arbitration clause as a result of force or fraud, the court will refuse to compel arbitration.  Observers note that a recent United States Supreme Court holding suggests that this may not be true in cases where an arbitration clause is part of a larger contract. The observers further note that this could result in a person who was tricked or forced into signing a contract being involuntarily forced into arbitration.   

C.S.S.B. 1216 seeks to address this issue by amending current law relating to determination of the validity and enforceability of a contract containing an arbitration agreement in suits for dissolution of marriage and certain suits affecting the parent-child relationship.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.S.B. 1216 amends the Family Code to require a court, if a party to a suit for dissolution of a marriage or a suit affecting the parent-child relationship opposes an application to compel arbitration or makes an application to stay arbitration and asserts that the contract containing the agreement to arbitrate is not valid or enforceable, to try the issue promptly.  The bill authorizes the court to order arbitration only if the court determines that the contract containing the agreement to arbitrate is valid and enforceable against the party seeking to avoid arbitration. The bill specifies that such a determination does not affect the court's authority to stay arbitration or refuse to compel arbitration on any other ground provided by law. The bill specifies that its provisions do not apply to a court order; a mediated settlement agreement or a collaborative law agreement under provisions of law relating to a suit for dissolution of a marriage or a suit affecting the parent-child relationship regarding conservatorship, possession, and access to a child, as applicable; a written settlement agreement reached at an informal settlement conference in a suit for the dissolution of a marriage; an agreed parenting plan under provisions of law relating to a suit affecting the parent-child relationship regarding conservatorship, possession, and access to a child; or any other agreement between the parties that is approved by the court.

EFFECTIVE DATE

On passage, or, if the bill does not receive the necessary vote, September 1, 2011.

COMPARISON OF ORIGINAL AND SUBSTITUTE

C.S.S.B. 1216 differs from the original by including a mediated settlement agreement, a collaborative law agreement, and a written settlement agreement reached at an informal settlement conference, described by provisions of law relating to alternative dispute resolutions in a suit for the dissolution of a marriage, in the agreements to which the provisions relating to the determination of validity and enforceability of a contract containing an agreement to arbitrate in a suit for the dissolution of a marriage do not apply, whereas the original does not include those three agreements in those provisions.