Arbitration clauses can be very important parts of commercial contracts. As with any contract clause, one of the keys is understanding exactly what situations the clause covers and what situations it doesn’t. Florida law says that “no party may be forced to submit a dispute to arbitration that the party did not intend and agree to arbitrate.” In other words, there must be a clearly enforceable arbitration clause and it must clearly cover the dispute at issue, or else there is no right to seek compulsory arbitration. Without question, whether you are seeking to enforce an arbitration clause or seeking bypass it and proceed in court, it pays to have the skill and knowledge of an experienced South Florida commercial litigation attorney on your side.
A dispute over the construction of an apartment complex was a good example of how this analysis works. In late 2006, a Tennessee-based construction firm inked a deal to construct an apartment complex for seniors in Titusville. The agreement was spelled out across two documents – a primary contract and a supplemental conditions document.
Not happy with the construction work, the complex sued the construction firm for breach of contract. The construction firm asked the court to dismiss or stay the litigation action. According to the construction firm, the agreement called for alternative dispute resolution of claims like the one lodged by the complex. Specifically, the agreement required that the parties mediate and, if that failed, undergo arbitration of the claims.
The appeals court, in making its ruling, explained that are three things that must be present in order for an arbitration agreement to be enforceable. One, a valid agreement to arbitrate must exist. Two, an issue that can be decided by arbitration must exist. Three, the party seeking to arbitrate must not have validly waived its right to demand arbitration.
In the complex’s case, the contract, as modified by the supplemental document, required that all disputes be submitted to the architect. The architect was required to make a decision, which was final and binding. If a party was not happy with the architect’s decision, then that party could seek to mediate the issue. If mediation did not yield a mutually agreeable solution, then the matter proceeded to arbitration, according to the document. That, the appeals court stated, met the standard for the first required element.
The evidence on the second element was less clear. The procedures were straightforward and unambiguous for situations where the architect made a decision within 30 days. However, if the architect did not render a decision within 30 days, then arbitration was not mandatory.
The law in Florida says that the agreement to be bound by arbitration must be clear. In this case, there was no clear agreement for cases in which the architect did not timely make a decision. What that meant was that, if the architect made a decision within 30 days, the construction firm was entitled to demand arbitration. If not, then the complex was entitled to litigate.
For the kind of knowledge and experience your case deserves, rely on the experienced South Florida commercial litigation attorneys at Stok Kon + Braverman. Our attorneys have been effectively representing clients in a wide range of commercial litigation cases here in Florida for many years and are ready to get to work for you.
Contact us online or by calling (954) 237-1777 to schedule your consultation and find out how this firm can help you.