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Arbitration: Connecticut's Supreme Court Backs Credit Card Debtor's Post-Award (Web)

In MBNA America Bank v. Boata, SC 17668, 2007 WL 2089678 (Conn.)(July 31, 2007)(available at, the Connecticut Supreme Court affirmed an appellate court decision allowing a defendant credit card holder to challenge a claim’s arbitrability against him even though an arbitration award had been issued, so long as it was before the award was confirmed.

Plaintiff MBNA America Bank alleged that the defendant, Toefil Boata, defaulted on paying his credit card's $45,000 outstanding balance.

The original 1996 cardholder agreement did not include an arbitration provision. MBNA claimed that three years after the card was issued, it gave the defendant notice of a cardholder agreement amendment stating that all claims under the agreement would be resolved through binding arbitration. There was a 45-day period in which defendant Boata could opt out of the amendment through written notice.
But Boata asserted that he hadn’t received the notice, and the binding arbitration clause did not apply to him.

After a March 2004, arbitration, MBNA was awarded nearly $57,500. The arbitrator did not address whether the defendant had agreed to the binding arbitration contract amendment.
On Aug. 17, 2004, MBNA filed to confirm the arbitration award. Shortly after, the defendant objected to the award on the ground that “the parties had not entered into a written agreement to arbitrate.” Thus, the arbitrator had no authority to issue an award.

The trial court relied on the General Statutes §§ 52-417 to 52-419, considering the objection a motion to vacate, modify or correct an award. It found that because the objection was not filed within 30 days of the notice of the arbitration award, it could not consider the objection. The trial court confirmed the award.
Boata appealed, claiming that the trial court erred in concluding that he had failed to “assert his right to challenge the arbitrability of his claim in a timely manner.” The intermediate court reversed the trial court decision and remanded the case for a determination of arbitrability.

On addressing the issue as to whether the Connecticut Appellate Court properly reversed the lower ruling, the Supreme Court examined whether the defendant had preserved his right to contend the arbitrability of MBNA’s claim.

The Supreme Court prefaced its examination of the issue by stating that arbitration is “favor(ed) . . . as an alternative method of dispute resolution.” The Court reviewed the defendant’s arbitrability claim de novo because it was a question of law.

Both the plaintiff and defendant relied on Bennett v. Meader, 208 Conn. 352, 545 A.2d 553 (1988), in their arguments. The plaintiff said that “if a defendant submits to arbitration without legitimately raising the issue of arbitrability, that party may be deemed to have waived his right to judicial review of the arbitrability issue.”

Conversely the defendant used the case to highlight that arbitrability is a “creature of contract,” and that the interpretation can be reviewed at any point before the court's confirmation of the arbitration award–the position adopted by the appeals court.

The Supreme Court noted that since an arbitrator’s power is given by the mutual assent of the parties, then claims that an arbitrator lacks the authority to hear a matter may be waived. But a claim that there was no an agreement to arbitrate, and thus that mutual assent was not given, cannot be waived. This type of objection can be raised at any time before the award's confirmation, the Court held.

The Court distinguished Bennett, noting because that contention was about the “scope of an arbitrator's authority under an agreement.” The issue in MBNA America Bank was whether an agreement to arbitrate exists. By framing the issue in this way, the Supreme Court said that General Statutes §§ 52-417 to 52-419 did not apply because the defendant's objection is not contemplated by those laws.

The Court concluded that the defendant maintained the right to contest the arbitrability of the dispute until the moment that the award was confirmed. The issue of arbitrability was not waived by participating in an arbitration.

The Court affirmed the appeals court, and remanded the case for further proceedings, including whether the dispute was subject to binding arbitration.

--Robert A. Irwin, CPR Intern