Propounding facts has never been Sarah Sander’s forte as Trump’s flack. But this week she told the press that Trump had won an arbitration against Stephanie Clifford (Stormy Daniels). This must have come as a shock to Ms. Clifford, who is suing Trump to set aside a Settlement Agreement (“SA”) which includes an arbitration clause, on the grounds that Trump never signed the Agreement.
To win an arbitration, at a minimum, one must be party to an arbitration. So did Trump admit that he was a party to the Settlement Agreement? Did he invoke the arbitration clause? Well, apparently not. Instead, Michael Cohen apparently invoked arbitration on behalf of Essential Consultants, LLC (“EC”) which was also a party to the Agreement. Unfortunately, EC has no standing to arbitrate without Trump being a party.
SA Section 5.2 “Dispute Resolution” makes no reference to “parties”. Rather, it covers “all claims and controversies:” arising between Trump and Clifford. There is no mention of EC. Clifford has not agreed to arbitrate claims by EC. EC only has two functions under the SA: deposit $130,000 (SA Section 3.01.1) and receive Clifford’s notices to Trump (SA Section 8.8.1). It is difficult to imagine how EC could have an arbitrable claim. Further, the choice of law for interpreting the SA is one of three states selected by Trump (SA Section 8.2). EC has no right to select the state law. An arbitrator has no firm guidance for interpreting the SA. Accordingly, unless Trump is a party, arbitration cannot proceed.
There have been reports that Michael Cohen is upset because he hasn’t been reimbursed for the $130,000 that EC paid Clifford under the SA. More bad news, Michael. Under SA Section 8.2, the prevailing party is entitled to attorneys fees. Good luck getting reimbursed for those fees.
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