TCJL has filed an amicus curiae brief in a case that seeks to nullify an arbitration provision in a contract between two offshore oil producers. The issue in TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC (No. 21-0028) is whether a contract language that incorporates by reference the rules of the American Arbitration Association (AAA), which include a specific provision delegating the threshold question of the arbitrator’s jurisdiction to the arbitrator, expresses a “clear and unmistakable intent” to arbitrate the question of arbitrability. The Tyler Court of Appeals answered in the affirmative, but SCOTX granted review.
TCJL’s brief in support of Respondent MP Gulf of Mexico’s brief on the merits argues that a provision incorporation the AAA rules can only be read to mean all of those rules. If the parties had wanted to carve out Rule 7(a) and separately provide for its application, they could easily have done so, especially in a transaction between sophisticated parties who negotiated robustly and at arm’s length. We also expressed serious concerns about the effect of a ruling in favor of the Petitioner that on contracts with similar incorporation provisions. Not only would such a ruling represent, in our words, “a breath-taking public incursion into the realm of freely-made private agreements,” it would potentially negate any number of contracts that incorporate regulations or policies by reference. A few that come to mind include OSHA or other safety standards, employment regulations and policies, workers’ compensation statutory and regulatory provisions, or National Highway Traffic Safety Administration rules. We simply see no compelling reason to single out a contractual arbitration clause for different treatment than any other provision that expressly incorporates extrinsic documents.
SCOTX will hear oral arguments in the case on September 20.