Arbitration of Disputes

Arbitration is a potential way to resolve church disputes without going to the civil courts.

Church Law and Tax

Arbitration of Disputes

Arbitration is a potential way to resolve church disputes without going to the civil courts.

Key point 7-04. Churches and denominational agencies can avoid church property disputes by adopting appropriate nondoctrinal language in deeds, trusts, local church bylaws, or denominational bylaws.

Key point 10-16.8. Churches have various defenses available to them if they are sued as a result of a personal injury. One such defense is an arbitration policy. By adopting an arbitration policy, a church can compel members to arbitrate specified disputes with their church rather than pursue their claim in the civil courts.

An Iowa court compelled a church to submit to the arbitration of a dispute it had with a denominational agency as a result of an arbitration provision in the agency’s governing documents. A pastor wrote his denomination (the “national church”) informing it that his church had voted unanimously to withdraw from the national church. An officer of the national church informed the pastor that the actions of his church violated the denominational Book of Discipline in several respects, including a requirement that all disputes be resolved through Christian arbitration. The Book of Discipline specifies that the national church and its affiliated congregations “agree that they will attempt to resolve all non-doctrinal disputes among themselves without resort to the courts. A non-doctrinal dispute is a dispute … that a civil court could otherwise decide and, therefore, does not include matters of church doctrine.”

When the pastor refused to resolve the dispute through arbitration, the national church responded by asking a court to compel arbitration as required by the Book of Discipline. The court granted the national church’s request and ordered the dissident church to submit to arbitration. The church appealed, claiming that there was no enforceable agreement to arbitrate.

A state appeals court began its opinion by noting that arbitration “is a matter of contract and parties cannot be compelled to arbitrate a question which they have not agreed to arbitrate.” The court cited a state statute requiring agreements to arbitrate to be contained in a “written contract.” The court ruled that the Book of Discipline constituted a written contract requiring disputes to be settled through arbitration even though it did not use the term “contract.” It construed the Book of Discipline as an “offer” to local churches to join the national church, and churches “accepted” the offer by adopting a resolution for affiliation. The court concluded that “based on general principles of contract law, the record supports there was an offer and acceptance between the parties in their assent to be bound and formally affiliated.”

Having found that a valid arbitration agreement existed, the court addressed the question of whether the conflict in this case was non-doctrinal in nature, since such a finding would compel arbitration under the Book of Discipline. The court agreed with the national church that the dispute was non-doctrinal since it involved control of church property, which is an issue that the civil courts may resolve. It concluded:

Because either a proper withdrawal under the Discipline or an improper withdrawal where [the church’s] building could be left in the hands of [the national church] will affect the property interests of both parties, and these property interests are contemplated in and embraced by the language of [the Book of Discipline] we find that a non-doctrinal dispute exists between the parties and that the dispute concerning the property, which stems from the proposed withdrawal, is subject to resolution via the agreed upon method under the Discipline utilizing “Christian conciliation, mediation, or arbitration.” We therefore affirm the district court’s ruling, granting [the national church’s] application for order to compel arbitration.

What This Means For Churches:
This case is important because it illustrates that arbitration is a potential means of resolving internal church disputes without having to go to the civil courts. It is imperative that any arbitration provision be drafted by an attorney, since several courts have refused to enforce arbitration provisions in the governing documents of churches and religious denominations on the basis of a technical defect that was not understood by the laypersons who drafted the provision. General Conference v. Faith Church, 809 N.W.2d 117 (Iowa 2012).

This article first appeared in Church Law & Tax Report, March/April 2013.

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