Third Circuit Holds Arbitration Agreement Unenforceable Based On Unenforceable Choice Of Law Provision

In Williams v. Medley Opportunity Fund II, LP, the Third Circuit affirmed the denial of a motion to compel arbitration. The contract provided that tribal law would apply to the dispute. The court determined the choice of law provision unlawfully purported to obviate statutory provisions governing the payday loans in question. Because, in the court’s view, the choice of law provisions were “integral to the entire arbitration agreement,” they could not be severed. Therefore, the court determined that the entire arbitration agreement was unenforceable.