Plaintiff and defendant entered into a contract containing a provision that "any controversy or claim arising out of or relating to this Agreement... shall be settled by arbitration." A dispute arose and defendant demanded arbitration. Plaintiff brought an action in federal district court to rescind the contract on the ground of fraudulent inducement, moving to stay arbitration. Defendant cross-moved to stay trial pending arbitration. The district court granted defendant's motion and denied plaintiff's. The Second Circuit Court of Appeals affirmed. Held: Unless there is an allegation that the arbitration provision itself was fraudulently induced, an issue of fraudulent inducement of a contract containing an arbitration provision must be arbitrated even if the relief sought is rescission. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 360 F.2d 315 (2d Cir.), cert. granted, 87 Sup. Ct. 202 (1966).
Arbitration Clauses and Fraudulent Inducement,
Wash. L. & Rev.
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