In A-1 Premium Acceptance, Inc. v. Hunter, the Missouri Supreme Court upheld the circuit court’s order denying counterclaim defendant A-1’s motion to compel arbitration because the plain language of the consumer arbitration agreement limited the arbitrator to the National Arbitration Forum (NAF).  After the parties executed the arbitration agreement, NAF entered into a consent decree with the Minnesota Attorney General requiring NAF immediately to stop providing arbitration services for consumer claims nationwide.

The parties’ arbitration agreement stated that claims “shall be resolved by binding arbitration by the National Arbitration Forum, under the Code of Procedure then in effect.”  The applicable Code of Procedure provides that only NAP may administer the Code.  Thus, even though the arbitration agreement did not expressly state that arbitration can proceed “only” before NAF, the Court explained that the parties agreed to arbitrate only before NAF because the language identifying NAF was coupled with the reference to a Code of Procedure that mandates only NAF can administer the Code.  The fact that A-1 drafted the agreement and could have included language contemplating the unavailability of NAF precludes any inference that the parties intended to arbitrate before another arbitrator in the event NAF became unavailable.  Accordingly, the Court ruled the parties had agreed to arbitrate “before NAF and no other arbitrator.”

The Missouri Supreme Court’s decision in A-1 Premium may have far-reaching implications for lenders based on NAF’s agreement to withdraw from arbitration services for consumer claims nationwide.  As the Court noted, however, courts are split on whether NAF’s unavailability renders an arbitration agreement unenforceable.