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Given a standard contract between companies that include mandatory binding arbitration for any contract disputes: Is arbitration still mandatory when the contract violation is also a serious criminal violation?

  • In what jurisdiction? – cpast Dec 29 '18 at 2:21
  • @cpast The companies are U.S. and the contracts inter-state. – RobC Dec 29 '18 at 2:54
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A contract violation (or a tort)_ as between two parties is a separate issue from a criminal violation, even though the same conduct might represent both.

It might be mandatory to use arbitration to settle the civil issue. However, no arbitration decree or contract can compel one party not to report a crime, particularly when failure to report would itself be criminal. Nor can a contract requiring arbitration to deal with a dispute over a contract bind the authorities from prosecuting a crime, should they believe that there is a crime to be dealt with.

  • Am I correct in interpreting that the company would have to be found guilty of the criminal activity to be sued outside of arbitration for damages related to that criminal activity? – RobC Dec 29 '18 at 2:51
  • @RobC No. That would be a separate issue, although a criminal conviction might be a significant factor. One can file suit without a conviction but with evidence of why enforcing an arbitration clause would be unjust. But recent US decisions have tended to favor arbitration. – David Siegel Dec 31 '18 at 3:33

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