Similar Agreements Have Been Upheld
The most commonly-cited case is Encore Productions, Inc. v. Promise Keepers, (D. Colo 1999) In this case, a federal district judge held that the following arbitration clause was legally enforceable:
Any claim or dispute arising from or related to this Agreement shall be settled by mediation and, if necessary, legally binding arbitration, in accordance with the Rules of Procedure for Christian Conciliation of the Institute for Christian Conciliation. Such arbitration shall be held in Colorado unless otherwise agreed by both parties. Judgment upon an arbitration award may be entered in any court otherwise having jurisdiction.
Crucially, this provision is much more specific about who is to arbitrate and under what process. The agreement also had a choice-of-law clause that bound the arbitrator to reach a decision consistent with Colorado law.
In this ruling, the judge addresses the issue of how a secular court might be put in the position of ruling on theological issues:
A court can, and should, apply neutral principles of law to determine disputed questions that do not implicate religious doctrine. Jones v. Wolf, 443 U.S. 595, 99 S.Ct. 3020, 61 L.Ed.2d 775 (1979). "Neutral principles" are secular legal rules whose application to religious parties or disputes do not entail theological or religious evaluations. See id. I recognize that I must diligently avoid impermissible First Amendment entanglement. However, by employing neutral principles, courts can review decisions of religious bodies within permissible constitutional boundaries. See id. Thus, if cause is later shown to review the Christian Conciliation's arbitration results, a court can do so within the limitations governing review of any arbitration award. This is especially true in this case where the claims do not involve religious determinations or doctrines.
Some Others Have Been Invalidated
For example, in Southern California District Council of the Assemblies of God, Inc., v. Sonlite Tabernacle (Cal. App. 2 Dist.), a church was suing its denomination, whose by-laws called for arbitration by “an ordained minister” in “good standing” with the denomination. The court ruled that “some minimum levels of integrity” required that neither party to the dispute could be the arbitrator as well.