We all do it. We all use multipart agreements, or structure transactions where multiple parties are agreeing to the same set of terms and conditions, or seek to bind remote parties to a unified set of obligations, because it makes sense to do that from any number of perspectives. In construction, the practice has existed beyond memory: use of “incorporation by reference” or “flow-down” clauses to impose consistent contractual obligations down the chain of privity is so common as to be remarkable only in its absence. When done lazily, however, problems can result, particularly in the areas of dispute resolution, as illustrated by recent court decisions concerning arbitration clauses that were “incorporated by reference”.
For many reasons, it’s good to be New England Patriots quarterback Tom Brady in Boston. However, in light of two recent Massachusetts trial court decisions, it may have been good for him that he was not in court in Boston over the summer when challenging the NFL’s adverse arbitration ruling. Over the space of two weeks in late November and early December, the Massachusetts Superior Court showed a markedly, if not surprising, pro-arbitration bent, as it upheld a party’s right to enforce an agreement to arbitrate, even after eight months of litigation in court, and upheld an arbitral award that applied out-of-state law in conferring multiple damages against a respondent despite a choice-of-law clause in the agreement mandating Massachusetts law. Either decision taken individually would be indicative of significant judicial deference to arbitration and arbitral awards. Together, they show the challenges that parties may face when attempting to avoid both an arbitration clause and/or a highly adverse, perhaps even peculiar, result.