Oregon Case Law Update: “Formal Institution” of Arbitration Proceedings Requires Explicit Offer or Demand to Arbitrate

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Oregon Case Law Update: “Formal Institution” of Arbitration Proceedings Requires Explicit Offer or Demand to Arbitrate

From the desk of Josh Hayward: Oregon law allows an insurer to place conditions limiting when an insured has a cause of action against the insurer for uninsured/underinsured motorist (“UM/UIM”) benefits, including mandating that the insured or the insurer “formally institute” arbitration proceedings within a specific time period. What is required to “formally institute” arbitration proceedings? Read on to learn more.

Claims Pointer: In this case, the Court of Appeals held that “formal institution” of arbitration requires that a party explicitly offer to arbitrate or demand arbitration. Absent such an explicit offer or demand, no “formal” institution of arbitration has occurred. The case explains prior Oregon case law and provides clarification about how a party can “formally institute” arbitration proceedings.

State Farm Mutual Automobile Ins. Co. v. Sieger, 285 Or App 727 (May 24, 2017)

Eunice Sieger (“Sieger”) was involved in a car accident on September 29, 2011. Because the other driver was uninsured, Sieger filed a claim with her insurer, State Farm, for UM/UIM benefits. In response, State Farm sent her a letter advising that if the parties were not able to reach an agreement as to the amount of benefits due under the policy, State Farm consented to submit the claim to binding arbitration. State Farm later filed a declaratory action regarding its obligations to provide UM/UIM benefits to Sieger, arguing that neither party formally instituted arbitration proceedings within two years. The trial court agreed, ruling that Sieger had no cause of action against State Farm. Sieger appealed.

An Oregon statute, ORS 742.504, establishes required provisions for uninsured motorist coverage. As relevant here, the statutory language includes the requirement that the parties to the coverage agree that no cause of action...

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