Arbitration in Missouri

Overview

Arbitration in Missouri refers to the process of using a arbitration process outside of the regular court system to hear and settle disputes.

There is a private arbitration provision contained in the standard ALTA title insurance policy. Mandatory arbitration is prohibited in Missouri. If MO Rev Stat § 435.350; Simon v. Liberty Mut. Fire Ins. Co., Case No. 17-cv-0152 (USDC W.D. Mo. Dec. 8, 2017). Any policies and other forms issued is Missouri should not contain this provision or should have them removed by endorsement.

Mandatory Arbitration provisions, including those contracts that state they are governed by the laws of a jurisdiction other than Missouri will not be enforced by Missouri courts as a violation of public policy.

We recognize that generally parties may choose the state whose law will govern the interpretation of their contractual rights and duties. Tri–County Retreading, Inc. v. Bandag Inc., 851 S.W.2d 780, 784 (Mo.App. E.D.1993). As long as the application of this law is not contrary to a fundamental policy of Missouri, we will honor the parties' choice of law provision. Id. Here, the application of California law would allow the arbitration clause in an insurance policy to be enforced. Such a result would be contrary to Missouri public policy, because Section 435.3501 of the Missouri Arbitration Act prohibits mandatory arbitration provisions in insurance contracts. Section 435.350, entitled “Validity of arbitration agreement,” provides that such provisions are invalid, unenforceable and revocable:

A written agreement to submit any existing controversy to arbitration or a provision in a written contract, except contracts of insurance and contracts of adhesion, to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract. Contracts which warrant new homes against defects in construction and reinsurance contracts are not ‘contracts of insurance or contracts of adhesion’ for purposes of the arbitration provisions of this section. [Emphasis added.] This section makes clear that Missouri law deems arbitration agreements in insurance contracts to be invalid. In accord, Standard Security Life Ins. Co. of New York v. West, 267 F.3d 821, 824 (8th Cir.2001); Datacor, Inc. v. Heritage Warranty Ins. Risk Retention Group, Inc., No. 4:09–CV–1123 (CEJ), 2009 WL 5062137 at *2, 3 (E.D.Mo. December 16, 2009); Tamko Building Products, Inc. v. Factory Mutual Ins. Co., No. 4:09–CV–1401 (CDP), 2009 WL 5216999 at *2 (E.D.Mo. December 30, 2009). “The laws and judicial decisions of our state, as well as the applicable principles of common law are essential in determining whether an arbitration provision in an insurance policy is contrary to our public policy.” Allen Foods, Inc. v. Lawlor, 94 S.W.3d 436, 438 (Mo.App. E.D.2003), citing Fidelity & Deposit Co. of Maryland v. Grand Nat. Bank of St. Louis, 69 F.2d 177, 180 (8th Cir.1934). Public policy is declared in a statute. Northland Ins. Co. v. Bess, 869 S.W.2d 157, 159 (Mo.App. E.D.1993). Our legislature has expressed Missouri's public policy in the enactment of Section 435.350. See Allen Foods, 94 S.W.3d at 438.

Sturgeon v. Allied Professionals Ins. Co., 344 S.W.3d 205, 210 (Mo. Ct. App. 2011)

Cross-References

• Missouri
• Title Insurance Policies in Missouri