In Ambeliotis v. Brown, 33 Mass.L.Rptr. No. 7 138 (January 25, 2016), the Court ruled that the plaintiff trust beneficiary must pursue her breach of fiduciary duty claims against the trustees in arbitration, even though she was not a signatory of and claimed not to have been informed about or consented to the agreement providing for arbitration of disputes. The plaintiff was a beneficiary of a trust, which in turn was a beneficiary of a parent trust whose trustees entered into a voting trust agreement that required arbitration of disputes. The plaintiff alleged that the trustees breached their fiduciary duties with regard to the management of business interests. Citing strong public policy favoring the liberal enforcement of arbitration provisions, the Court upheld enforcement of the arbitration clause, notwithstanding that the plaintiff had never agreed to arbitration.
Ambeliotis is another illustration of the broad judicial enforcement of arbitration provisions. What we don’t know is whether the trustees will regret their decision to force arbitration. If their experience is like that of many others, they may wish that they proceeded in court. In my view, litigation is almost always preferable to arbitration: it is usually cheaper; the process is clearer; the results are more predictable; and the rights to appeal are often superior. Counsel recommending inclusion of an arbitration clause in an agreement or trust may not be doing the client a service.
