What is the public policy exception to the enforcement of an arbitration agreement?
The public policy exception to the enforcement of an arbitration agreement is a legal principle that states that parties cannot be forced to enter into an agreement that goes against public policy. This policy aims to protect citizens from signing agreements that would be detrimental to the public good. In Washington, the Supreme Court of Washington established the public policy exception to arbitration agreements in the Lipscomb v. Quimby decision. This case established that a court can refuse to enforce an arbitration agreement if it is against fundamental public policy. This public policy exception applies to both statutory and common law. When determining whether an arbitration agreement is against public policy, courts in Washington consider the following factors: (1) the law of the state, (2) principles of justice, (3) the rights of third parties and (4) interests of the public. Typically, a court will only enforce an arbitration agreement if all of these factors are met. Ultimately, the public policy exception to the enforcement of an arbitration agreement is an important legal principle that helps protect citizens from signing agreements that could be potentially harmful to their interests and the public good. This principle helps ensure fairness and safeguards citizens’ rights.
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