Back in the days when I was in private practice, I represented a large national corporation, defending a lawsuit brought in Colorado. Similar lawsuits were pending in other states. Under Colorado law there was a clear statutory defense which I described to home office in-house counsel. Home office directed that the defense not be raised because taking that position could have unfortunate consequences in several other states. If the arbitration agreement requires the mediator to use a state's substantive law, I certainly agree that a "missed" defense or legal theory should be brought to counsel's attention. There may be a good reason it was not asserted.