Waterfront Marine Construction, Inc. v. North End 49ers Sandbridge Bulkhead Groups A, B and C
468 S.E.2d 894 | Supreme Court of Virginia | 1996
What This Case Means for Subcontractors
Waterfront Marine Construction built a bulkhead for a Virginia Beach homeowner group, which later failed. The homeowners demanded arbitration claiming defective work. The Virginia Supreme Court ruled that courts—not arbitrators—decide whether a dispute is arbitrable unless the contract explicitly says otherwise. The court also held that disputes over whether someone complied with a prior arbitration award cannot be arbitrated under the original contract.
Key Takeaways
- •If a client sues you over arbitrability, the court will decide the issue, not an arbitrator. Your arbitration clause must be crystal clear if you want arbitrators handling arbitrability questions.
- •Don't assume an arbitration clause covers everything. Disputes about whether someone followed a previous arbitration award are separate and go back to court.
- •Include explicit language in your contract stating that arbitrators decide arbitrability questions. Without it, you'll face court proceedings before arbitration even starts.
In the absence of a clear agreement showing that the parties intended that the arbitrator decide questions of arbitrability, that question is to be resolved by the court.
Frequently Asked Question
Can an arbitrator decide whether our dispute should be arbitrated, or does a court have to decide that?
A court decides arbitrability unless your contract explicitly states the arbitrator will decide. This Virginia case makes clear that without specific language giving arbitrators that power, courts handle the threshold question of whether arbitration applies at all.
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