arbitration agreement Archives - Attorney Scott S. Orenstein

The Right to Arbitrate may be Waived if Opposing Party Suffers Prejudice

As discussed previously in this blog, arbitration is an alternative dispute resolution procedure, whereby the parties to a construction contract can agree to have their disputes heard by a private individual (or a panel of three individuals), whose decision is final and binding upon the parties. Arbitration is favored by the Connecticut courts, and, when done correctly, can provide the parties with a fast, efficient, and economical resolution of their dispute. The question, however, is to what extent may a party to a contract containing an arbitration clause avail himself of the courts before the right to arbitrate has been waived. A recent Connecticut Supreme Court decision clarifies that situation.

In MSO, LLC v. DeSimone, 313 Conn. 54, the parties leave agreement included an arbitration clause. The tenant, MSO, LLC, brought an action for damages against the landlord, DeSimone. Id. The landlord defended the action and brought a counterclaim against the tenant. Id. After two years of litigation, the landlord moved to stay the action pending arbitration. Id.

If a motion to stay a lawsuit pending arbitration is brought pursuant to a valid agreement to arbitration, the court is without discretion to deny the motion.

Scott Orenstein
11.09.2014
Arbitration, Connecticut Construction Law, Connecticut construction lawyer, Construction Attorney, Construction Law, Contract Law, mechanic's lien
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Arbitration Awards May Be Amended by the Arbitrator

Arbitration is a procedure by which parties to a contract agree in advance that any disputes arising out of that agreement will be submitted to a private individual or a panel of private individuals to issue a final decision referred to as an “award” that is final and binding upon the parties. Much like a court trial, in an arbitraiton, a single arbitrator or panel of arbitrators will hear testimony and take evidence presented by the parties or their legal counsel and then make findings of fact and law that lead to one party prevailing over the other.

Arbitration has become a very popular dispute resolution procedure in construction contract disputes because of its intended efficiency and finality. In general, the courts favor arbitration and, as a result, judicial interference in arbitration awards is very limited. In Connecticut, as in most states, a court will only vacate, modify or correct an arbitration award for a handful of statutory reasons, which do not include re-litigating the matter. In other words, you cannot convince a court to throw out an arbitration award merely by pointing out the arbitrator made a mistake of fact or law.

Arbitrability: Who Decides Who Gets To Decide?

Arbitration has become a popular alternative to traditional courtroom litigation for construction contract disputes; however, arbitration is a creature of contract. No one can be forced to arbitrate an issue that they have not agreed to arbitrate. The problem is that the parties sometimes disagree over what issues they have agreed to arbitrate. In those instances, the issue is whether the court or the arbitrator(s) get to decide whether any specific dispute is subject to the contract’s arbitration clause. The Superior Court addressed this issue most recently in Montowese Industrial Park, LLC v. The Thomas W. Golden Realty Company.

In Montowese, the Court started with the general rule, which states that it is for the Court to decide whether a specific dispute is arbitrable based upon the Court’s authority to interpret contracts. The Court then went on to state that the parties had the authority to transfer that authority to the arbitrator(s) if they chose to do so. In other words, the parties could, by contract, allow the arbitrator(s) to decide whether a particular dispute was within the subject agreement’s arbitration clause.

The Court then went on to state that the Court could imply that the parties had intended to leave the issue of arbitrability up to the arbitrator(s).

The Contract and Not Common Sense Determines the Proper Parties to an Arbitration

Many construction contracts require the parties to resolve their disputes through alternate dispute resolution procedures such as mediation and arbitration. Arbitration is intended to be a cost effective alternative to litigation. The issue of whether arbitration works as well as intended will be the subject of a future post on this Blog but the topic of discussion here is the question of determining the proper parties to any given arbitration. The answer is counterintuitive.

When it comes to arbitration, there are several well settled rules. For example, courts favor arbitration, arbitration is a creature of contract, and no party will be forced to arbitrate when it has not agreed to do so. In light of the foregoing, you might believe that a party, who is named in a demand for arbitration, files an answer to the demand, and participates in the arbitration hearing, has agreed to arbitrate and should be held liable for any arbitrator’s award that enters against it. If you did believe that, however, you’d be wrong.

In CDIFUND, LLC v. Lenkowski, disputes arising out of home construction contracts were arbitrated. CDIFUND, LLC v. Lenkowski, 2011 Conn. Super.

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