Thursday, 7 August 2003

Unrestricted Right To Amend Dooms Arbitration Program

Another court holds that an employer who retains an unrestricted right to amend an arbitration agreement ends up with an agreement that will not be enforced. In Re: Jobe Concrete Products, Inc. (Tx. App. - El Paso 7/31/03). The Texas Supreme Court has already approved a way for an employer to maintain the flexibility to modify a plan and still have it enforcible in In Re: Halliburton Company:

Myers also asserts that Halliburton's promises were illusory because the company retained the right to modify or discontinue the Program. But the Program also provided that “no amendment shall apply to a Dispute of which the Sponsor [Halliburton] had actual notice on the date of amendment.” As to termination, the plan stated that “termination shall not be effective until 10 days after reasonable notice of termination is given to Employees or as to Disputes which arose prior to the date of termination.” Therefore, Halliburton cannot avoid its promise to arbitrate by amending the provision or terminating it altogether. Accordingly, the provision is not illusory.

Once plans are drafted it is important to make sure that they stay in sync with developing law.

No comments:

Post a Comment

Nice comment !