SOL in Arbitration

[CT Yankee]

Does one lose the defense if electing arbitration (JAMS)?

[BV80]

@CT Yankee

 

Give us a little more information.  Is the debt outside the SOL? 

[CT Yankee]

If the credit agreement state laws are used then yes. If my state laws are used, then no. I've seen info where the choise of laws are determined at the beginning of the arb process. I've also seen where the SOL defense does not apply to arb. This would be JAMS not "state" arb.

[nobk4me]

Let's consider a situation where the creditor uses Delaware law, where the SOL is 3 years.  Some creditors that use Delaware law are BofA, Chase, and Discover.

 

And let's say it is now 4 years since you defaulted.  And your state's SOL is 6 years.  And your state does not have a borrowing statute, or does but has bad case law (e.g., Ohio).

 

In this situation I would absolutely arbitrate in JAMS.  The parties can stipulate that the governing contract law is Delaware.  After all, that's what the cardmember agreement says, so how could it be anything else?

 

After the creditor files its claim for the debt, you move to dismiss their claim on the grounds that the SOL has expired.

 

Yes, it's possible that the arbitrator won't buy it.  But, in this scenario, it is 100% certain that a state court judge won't buy it either.  You will have a better chance with an arbitrator.

 

Now, if your state has a borrowing statute and good case law (CA and FL come to mind), and the Delaware-based creditor is suing you after 3 years, I would make the SOL argument in court rather than arb.