No, You May Not Contest an Order Granting Arbitration

The Texas Supreme Court ruled this morning to clarify that mandamus review is not necessarily available of an order granting a motion to compel arbitration when the underlying litigation is stayed rather than dismissed. According to the Court, one can only seek review of an order granting arbitration when the evidence shows “clearly and indisputably that the district court did not have the discretion to stay the proceedings pending arbitration.”

In this case, Olga Palacios filed a petition for writ of mandamus when a trial court granted a motion to compel arbitration filed by a mortgage company. Her testimony was that she did not sign the offered arbitration agreement, but she did in fact sign several papers whose purposes were unclear, as they were written in English, a language she cannot read. According to the Court, this testimony called her credibility into question, since she did not offer exemplars of her signature to demonstrate that the offered signature was not in fact hers. The Court would be wholly untroubled, in other words, if the arbitration agreement were written in a language Ms. Palacios could not read, so long as she did in fact sign it.

Finally, the Court notes: “we recognize there is some one-sidedness in reviewing only orders that deny arbitration, but not orders that compel it. Yet both the Federal and Texas acts leave little uncertainty that this is precisely what the respective legislatures intended.”

In re Olga Palacios, ___ S.W.3d ___ (Tex. 2006) (Cause No. 05-0038)

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arbitration, ADR, Texas Supreme Court, law